How to Finance a Commercial Property

Key highlights

• Commercial property purchases usually need a larger deposit than residential buys
• Secured loans against the property can unlock larger amounts and longer terms
• Rental income and business trading both influence how lenders assess you
• Comparing 80+ lenders can surface options a single bank may not offer
• Structure repayments around your cash flow, not just the headline rate

What financing a commercial property actually involves

Financing a commercial property is different from buying a home. Lenders treat the premises as a commercial asset, so they look at the property type, its location, the lease or your own occupancy, and how the purchase fits your business. A secured business loan backed by the property itself is the common route, and because there is real security behind it, amounts can be larger and terms longer than an unsecured facility. Funding across Overdrive's panel ranges from around $5,000 up to $5 million, with property-backed deals sitting at the larger end. Every figure here is indicative and subject to lender criteria and assessment, so the right structure depends on the property, your deposit and your trading history.

How much deposit you are likely to need

Commercial property generally requires a bigger deposit than a residential purchase. Depending on the lender, the property type and whether you will occupy it or lease it out, you may need to contribute a meaningful share of the purchase price, with the balance funded by a secured loan against the property. Owner-occupied premises can sometimes be viewed more favourably than investment properties, though this varies. If you already own other assets or property, some lenders may consider using them as additional security to reduce the cash you need upfront. These are general patterns only and depend entirely on the lender's assessment of your circumstances, so it pays to compare rather than assume one bank's deposit expectation is the market standard.

Secured loans and how lenders assess you

Because a commercial property loan is secured, the lender's focus is on both the asset and your ability to service the debt. They will review your business trading history, turnover, existing commitments and, where relevant, the rental income the property will generate. Strong, consistent cash flow and a solid deposit generally open up better options. Rates on commercial lending are product- and profile-dependent; stronger secured facilities can start from around 7.49% p.a., with pricing rising depending on turnover, term, security and credit profile. Nothing is guaranteed, and every rate is indicative and subject to assessment. A broker who understands how different lenders weigh these factors can point you toward the ones most likely to suit your profile.

Owner-occupied versus investment purchases

Your plans for the property shape the finance. If your business will operate from the premises, you are an owner-occupier, and lenders often assess the loan partly on your trading performance. If you are buying to lease the property to a tenant, the rental income and the strength of the lease become central to the picture. Some businesses buy premises they currently rent, converting rent into equity over time. Others purchase an additional site to expand. Each scenario carries different risks and different lender appetites. Being clear about your intention from the outset helps a broker target lenders whose criteria fit, rather than submitting to institutions that simply do not lend on your type of purchase.

Terms, repayments and protecting cash flow

Commercial property loans typically run over longer terms than short-term working capital, which helps keep repayments manageable, though terms across products generally range from three months to five years and property facilities are structured to suit. The goal is repayments your business can comfortably meet without starving day-to-day operations of cash. It can be worth pairing a property loan with a separate line of credit or overdraft so unexpected costs during settlement, fit-out or the first trading months do not create pressure. Thinking about the whole funding picture, rather than the property loan in isolation, tends to produce a more resilient outcome. Modelling repayments against realistic revenue, not best-case figures, is a sensible discipline.

The tax and structuring questions to raise early

How you own and finance commercial premises can have implications for GST, depreciation, interest deductibility and the entity that holds the asset. These questions sit outside a broker's role, and the answers depend heavily on your structure and goals. Before you commit, check with your accountant about the most appropriate ownership entity, any GST considerations on the purchase, and how the arrangement fits your broader tax position. Getting this advice early, rather than after settlement, can save considerable cost and complexity. Overdrive can arrange the finance and explain the loan mechanics clearly, but decisions about tax treatment and structure should always be made with your accountant's guidance for your specific situation.

Why comparing 80+ lenders helps on a property purchase

Appetite for commercial property varies enormously between lenders. One bank may be cautious about a particular property type or location while a non-bank lender is comfortable. Deposit expectations, acceptable security, servicing tests and pricing all differ. Applying to a single institution means accepting its view of your deal without seeing the alternatives. Overdrive's Simon Kendrick compares a panel of 80+ banks and non-bank lenders on one application, so you see options side by side and can weigh cost against structure and flexibility. For eligible applicants, this comparison can reveal a more suitable path than the first bank approached, and it saves you lodging multiple separate applications that each mark your file.

If you are weighing up how to finance a commercial property, an obligation-free chat is a practical first step. Simon Kendrick can talk through your purchase, run a soft credit check that does not affect your score, and compare options across 80+ lenders to find a structure that fits your deposit and cash flow. For eligible applicants, indicative terms can come back quickly and funding may be arranged efficiently once your deal is agreed. Get in touch with Overdrive Business Loans for a no-pressure quote, and bring your accountant into the tax and structuring questions along the way.