Commercial Property Loans

Commercial property loans is generally finance used to purchase retail stores, office buildings, factories or warehouses. Finance can also be to finance the building and development of commercial/industrial properties to sell, or lease. 

Commercial property loans is generally finance used to purchase retail stores, office buildings, factories or warehouses. Finance can also be to finance the building and development of commercial/industrial properties to sell, or lease.

Full-doc loan

A full doc loan required a comprehensive assessment of the applicants and/or guarantors.

You will need to provide complete information such as:

1. Income and liability statements
2. Full financials
3. Tax returns
4. Credit card statements.

There is more work required upfront with this type of product, but as a result the interest rate is more competitive, as there is less perceived risk.

Low-doc loan

Low-doc commercial property loans mean you don’t have to provide financial statements or tax returns.

This application needs a declaration of income from the applicant and/or their accountant of their income, and a statement that they can meet the repayments.

This type of commercial financing means that businesses with low profit margins have more options and flexibility still allowing them financing. This type of financing is offered through private lenders and non-bank institutions.

It is important to bear in mind that low-doc loan may incur high interest as the risk to the lender is deemed greater, but on the plus side,  application and approval is quicker and simpler.

No-doc loan

When an applicant has no documentation or accountant declaration, a loan is considered no-doc. This financing option is where there is an extremely strong exit strategy. These loans have a much faster turnaround time, with a higher interest rate.

You will find that goods and services tax (GST) applies when purchasing commercial or industrial properties, so you’ll need to allow an extra 10% on the property’s purchase price. GST can be claimed back as an input tax credit against GST charged on the property rent.

Long term leases

Commercial property leases are longer than residential property – and tend to be for several years instead of the standard residential leases of 6 – 12 months, offering longer security of rental income although vacancy times can be much greater.