Commercial Loan Questions:
- What is a commercial loan?
- What Deposit Is Required?
- What is the interest rate on commercial loans?
- How does a commercial loan work?
- What products are available for commercial property?
- What are the types of commercial loans?
- What are the requirements for a commercial loan?
- How long does it take to get a commercial loan?
- Do you charge a fee for your service?
Q. What is a commercial loan?
Commercial property loans involve the purchase or refinancing of established retail, industrial and multi residential properties. This includes the subdivision, development and construction of these types of properties
Business loansare for the purchase of franchises, established businesses or starting up a new business
Equipment leasingof motor vehicles, industry specific machinery and farm equipment
Business banking products such as business banking accounts, credit cards, overdrafts and unsecured debt and short term-lending
Q. What Deposit Is Required?
Deposits vary significantly across all types or commercial property and business loans. Examples are listed below.
- Commercial property borrow up to 90% of the properties value. It all depends on property type, location and strength of lease terms.
- On average lenders will allow you to borrow 70% of the properties value
- Business loans for purchases are usually 60% of the business value. Well known businesses and franchises up to 70%
- Development finance lenders can lend up to 75% of the development.
- Low Doc commercial property finance can be up to 75% and in some cases 80%
- Medical professionals can borrow between 90 and 100 percent of the business amount for property, business price and equipemnt.
Q. What is the interest rate on commercial loans?
Interest rates for commercial loans varies significantly depending on the type of asset purchased. It all depends o the associated risk associated with the asset. Generally speaking commercial property interest rates are likely to be less for business purchases, unsecured lending or equipment leasing. Also, the greater deposit or down payment the lower interest rate due to the lower risk.
See Commercial Loan Interest Rates here.
Q. How does a commercial loan work?
Commercial loans compared to residential property loans usually require a greater deposit, have higher interest rates, higher, shorter loan terms and stricter assessments due to the inherent risk of financing commercial assets.
Generally, there is a 10% GST component added to the cost of purchase, however, this may be refunded if the entity is registered for GST or waived depending on the type and circumstance of the purchase.
Q. What products are available for commercial property?
The kind of loans include variable rate loans, fixed interest loans and lines of credit. These loans can be paid on an interest only or principle and interest basis. Most commercial loans have a term between 0 and 15 years. It is possible to obtain loans between 25 and 30 years for commercial property.
See more about Commercial Property Loans
Q. What are the types of commercial loans?
The types of loans include commercial property, development finance, mezzanine finance, business loans, equipment and car leasing, business banking products.
Full doc loans are available for those that can show 2 years financials. Low doc loans that do not need to show financials but prove payments can be made either vi an accountants letter and or bank statements. Lease doc loans are loans where the income from the rental property can service the loan
Q. What are the requirements for a commercial loan?
A deposit. You will need to put down anything from 10% to 60% of the asset value
Affording the loan repayments. You will need to provide income details to prove you can service the loan. Self employed individuals/companies will need to show at least 2 years tax returns. PAYE can show as little as 2 most recent pay slips up to 2 years tax returns Rental income and other sources income can also be taken into account.
A security asset to borrow against. This can be a commercial property, a business, equipment's or other types of equity
Q. How long does it take to get a commercial loan?
This largeley depends on the type of commerial loan that is required. Commercial property can take anything from 2 weeks to over a year. Car and equipment leasing can take between a week to a month.
Q. How many years can I get a commercial loan?
Depending on the asset a commercial loan can range from 0 to 25 years. After a set period, commercial loans are often revised and a new loan term is negotiated.
Q. Do you charge a fee for your service?
No fees are charged for most cases. Highly challenging scenarios may incur a fee. Please contact us for more information.