Quick answer
A private commercial property loan is short to medium-term finance secured by an office, shop, warehouse, industrial unit or mixed-use building. It can fund a purchase, refinance an existing loan or release equity for the business. Loans run from $20,000 to $5,000,000, are assessed on the property and exit rather than full bank financials, and need no valuation before approval.
Key points
- Offices, retail, industrial, mixed-use and many specialised properties
- Fund purchases, settle on time, refinance or release equity
- Tenanted and vacant properties both considered
- No valuation needed before approval
- Common exit: refinance to a bank once the property or business is ready
Why commercial property needs a different kind of lender
Commercial property deals move on their own timetable. Contracts can have short settlement periods, vendors expect certainty, and auctions are unconditional the moment the hammer falls. Bank commercial lending, meanwhile, can involve detailed financials, lease reviews, formal valuations and credit committees. When those two timetables clash, a private commercial property loan fills the gap.
A private lender looks at the building itself, the title, any leases, the market for similar property and how the loan will be repaid. That is a narrower question than a bank asks, and it can be answered quickly.
What can a commercial property loan fund?
- A purchase that must settle before the bank is ready.
- A deposit or settlement shortfall, secured over other property you own.
- GST payable at settlement on a taxable commercial sale, until the credit comes back. See GST on commercial property.
- Stamp duty when cash is tied up elsewhere.
- A refinance of a commercial loan the bank will not renew.
- Equity release from a building you own outright to fund the business.
Property types considered
| Property type | Notes |
|---|---|
| Offices and strata office suites | Location and vacancy rates in the precinct matter |
| Retail shops and strips | Lease length and tenant quality affect the assessment |
| Warehouses and industrial units | Typically well regarded; access and zoning considered |
| Mixed-use buildings | Residential component can support the security |
| Medical and professional suites | Assessed on location and alternative uses |
| Specialised property such as pubs, childcare or service stations | Considered case by case, often at a lower LVR |
How commercial property is assessed
No valuation is needed before approval. Instead, the lender reviews comparable sales and leasing evidence, title searches, the lease schedule where there is one, photos and the property’s condition. Where a bank refinance is the planned exit, the bank will likely order its own valuation later; your private lender’s job is to get you to that point.
The main factors are location, the depth of the buyer market for that type of property, lease security, the building’s condition and any zoning or environmental issues. Our guide on commercial property as security explains each.
Interest, term and exit
Commercial property loans from private lenders are usually interest-only. Interest can be prepaid or added to the loan, which is helpful when the property is vacant or being repositioned and not yet producing rent. The term is set to the exit with a buffer, and the loan can stay in place longer if the exit is delayed.
Common exits are a bank refinance once the purchase has settled and financials are ready, the sale of the property or another asset, or the business’s own cash flow after a project completes.
Discuss your commercial property deal with a secured lending specialist.
Buying at auction or off-market
Auctions are unconditional. If you bid and win, you must settle, regardless of whether finance is in place. Off-market deals often come with short settlement periods because the vendor wants certainty in exchange for price. In both cases a private loan can provide that certainty. See auction purchases and off-market purchases.
An illustrative commercial purchase
Illustrative only. A physiotherapy business has been renting a ground-floor suite for years. The owner offers to sell it to them off-market on a five-week settlement, at a fair price, if they can commit quickly. Their bank supports the purchase in principle but needs eight to ten weeks. A private first mortgage settles the purchase on time, with interest capitalised. When the bank’s formal approval arrives two months later, the bank loan repays the private loan and the business now owns its premises.
GST and duty considerations
Commercial property transactions can involve GST and will usually involve transfer duty. If a property is sold as a going concern and both parties meet the ATO’s conditions, the sale can be GST-free. Otherwise GST may be payable on the price, with the buyer able to claim an input tax credit if registered. Transfer duty is set by each state’s revenue office and falls due within a set period. Both can create short-term cash demands that a secured loan can cover. Always confirm the GST and duty treatment of your contract with your accountant or conveyancer.
Vacant or under-leased buildings
A vacant building is harder for a bank to lend against because there is no rent to support the loan. A private lender focuses on the property’s value and the exit, so a vacant warehouse being leased up, or an office about to be refurbished, can still be financed. Expect a more conservative LVR and questions about your leasing plan and timeline.
Questions buyers often ask
Can I use my home to fund the deposit on commercial premises? Yes. A second mortgage or caveat over the home can fund the deposit while the purchase itself is financed against the new property.
What if the bank’s valuation comes in lower than the price? That creates a shortfall at settlement. A secured loan against other equity can cover it, with a plan to repay from savings, a sale or a later refinance.
Can a self-managed super fund borrow here? The loans described on this site are business loans to companies, trusts and individuals in business. Super fund borrowing has its own rules and is not covered here.
Get certainty on your settlement
Commercial property opportunities reward buyers who can commit. Tell us the property, the contract terms, your equity and how the loan will be repaid, and a specialist will confirm whether a private commercial loan can make the date. There is no credit check at the enquiry stage, your information stays with our team, and accurate contract dates and figures let us plan backwards from settlement. Enquire about a commercial property loan.
Frequently asked questions
Can a private lender fund a commercial property purchase?
Yes. A private first mortgage can settle a purchase on time, often with a bank refinance planned once the bank's process is complete. Where equity is available elsewhere, it can also fund the deposit or a shortfall.
Does the property need to be tenanted?
No. Tenanted property with a solid lease is often easier, but vacant commercial property is considered too. Vacancy affects the LVR and the exit, so explain your plan for the property.
Is GST payable on a commercial property purchase?
It can be, unless the sale is GST-free as a going concern or another exemption applies. A short-term loan can cover GST payable at settlement until the input tax credit is refunded. Get tax advice on your contract.
What LVR applies to commercial property?
Usually a little lower than for houses and units, because commercial property can take longer to sell. Location, condition, lease profile and the exit all matter.
Can I refinance a commercial loan the bank will not renew?
Yes. A private refinance repays the bank at settlement and gives the business time to find a long-term lender or sell.
Prefer to start now? Enquire here
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