Business Loans | Commercial Loans

Take your business to new heights


Why do I need a Business Loan?

Business loans are tailored to assist you with the purchase of an existing business, starting a new business or franchise, or for major investments in your current business. To qualify for a business loan you will need to prove to the bank that your business venture will be feasible and profitable. You also need to have the background and experience to run the business and that you will be easily able to repay the loan within the set timeframe.

 

How much can I borrow on a Business Loan?

Typically, when banks are giving a business loan, the business acts as a security. In this instance banks will lend maximum 50% of the value of the business or purchase price of the business excluding GST. If you need to secure a larger loan it is possible to offer the banks other assets in security such as your home or investment property. In this instance banks generally lend maximum 80% of the value of the asset being offered as security.

Business Loan Repayment Terms

Most business loans have a repayment period between 5-6 years. If you have borrowed some money to utilize in the business by offering a residential property in security, the funds secured against this property will have repayment period of 30 years. Because banks view businesses as a high risk security in comparison to a residential property, interest rates on business loans is usually 3-4% higher than standard home loan rates.
 

What Documentation Do I need for a Business Loan?

  1. Evidence of business’s financial performance and history such as profit & loss statement and assets and liabilities statement prepared by a chartered accountant.
  2. Business Sale and Purchase Agreement
  3. Copy of the Lease Agreement if business is going to operate out of a commercial premises

Commercial Loans 

What is a Commercial Loan?


A commercial loan is a loan secured by a commercial property such as an office building, shopping center, industrial warehouse, or a building in use to run a business such as dairy.

Advantages of a Commercial Property:

Generate Substantial Income From Leases
One of the biggest benefits of commercial property is that the asset is generally secured by leases which provide a regular income stream and a significantly higher return than typical stock or residential property.
Excellent Appreciation of Asset Value
Commercial properties tend to significantly increase in value from internal factors such as facilities added for the use of the business, improved accessibility, security controls to protect the operating business. These all improve the usability and desirability of the asset and external factors such as supply and demand imbalances.
Tax Benefits
Mortgage repayments on the commercial property, depreciation deductions and maintenance costs can guard a large portion of your lease income. It is recommended that one consults his/her tax advisor or accountant to understand all of the benefits.
Lower Your Business Expenses
A lease can be a significant expense for a business operating out of a commercial premise. Having your own commercial property can remove the lease expense and improve your business income and profitability by a mile.

How Much Can I borrow for a Commercial Loan?

On a commercial property, banks generally lend up to 65% of the value of the property or the purchase price. It is possible to get additional loan towards the commercial property by offering the banks other assets in security such as your home or investment property. Banks generally lend maximum 80% of the value of the home being offered in security.

Commercial Loan Repayment Terms

Most commercial loans repayment period is between 10-15 years. If you have borrowed some money to utilize in the business by offering a residential property in security, the funds secured against the home will have repayment period of 30 years. Interest rate on commercial loans is usually 1-2% higher than standard home loan rates. 

What Documentation do I Need for a Commercial Loan?

  • Commercial Property Sale and Purchase Agreement
  • Copy of the Lease Agreement between you and the business leasing the commercial property along with the mention of commercial rent excluding GST.