Commercial Loans

Commercial Loans / Commercial Lending / Commercial property loan / Commercial mortgage / Commercial Property Mortgage

Commercial Lending

So Commercial loans are a specialised area of finance. Your mortgage broker really needs to be on top of commercial loan policy, commercial property loan and commercial mortgage. The lending guidelines for commercial lending are very different to residential lending. Premium Mortgage Brokers are specialist commercial property mortgage brokers.

Types of Security

First of all there is two different categories of security that exist in commercial lending; standard commercial properties and specialised commercial properties. Standard commercial properties are the best type of security for a commercial loans. For example:

  • Retail space
  • Shop fronts
  • Offices
  • Warehouses
  • Factories
  • Residential

Specialised Commercial properties are much harder to sell as they can usually only be used for a certain purpose. They are much more difficult to borrow. This is why most lenders will usually lend a lower amount against these types of security. So Examples of specialised properties are:

  • Car wash
  • Car yards
  • Petrol stations
  • Pubs & hotels
  • Restaurants
  • Vineyards
  • Supermarkets
  • Private Schools
  • Farms
  • Child care
  • Aged care centres
  • Accomodation
  • Waste management facilities

Proving Income for Commercial Loans

Proving income is much easier for commercial property loan that it is for residential loans, as commercial lenders . Because, commercial lenders are not required to prove that a borrower can afford a loan. This gives the banks more leeway with their lending policies. Therefore, there are several income verification options available:

  • Low Doc. Partial income verification is needed such as BAS statements, bank statements and / or accountants letter.
  • Lease Doc. The income from the lease is higher than the interest (usually a multiple). Then you may qualify for a Lease Doc commercial loans.
  • No Doc. You dont need income verification.
  • Full Doc. You provide full financials to qualify for a full doc loan.
  • Forecasts. Your accountant would need to provide P&L and cash flow forecasts. Due to, that demonstrate that moving forward your business will comfortably be able to afford the loan repayments.

Advantages of using a Commercial Mortgage Broker

Due to the complexity of a commercial property loan application most sophisticated and high net worth investors will use a commercial mortgage broker when buying commercial property for the following reasons:

  • Pricing. What if a borrower applies for their commercial loan directly with the bank? Then the bank knows that they are not competing against other banks for your business. So they are not going to offer their sharpest pricing. When the the application is coming from a commercial mortgage broker, the situation is completely different. Because lender knows the broker will not accept anything but the sharpest pricing or the broker will go elsewhere.
  • Experience. A commercial property mortgage broker will know which lenders to contact. They know the full process and confidently guide you through the whole commercial loans process.
  • Specialised. Commercial lending is highly specialised. A good commercial mortgage broker will in most cases have much more experience than most business bankers that work for the banks. So a commercial property mortgage broker will in most cases get you a much better result.

We know the commercial lending business back to front. If you want to deal with an experienced broker who can work hard to get you the best result and guide you through the process then please contact us.

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