How to get a no deposit business loan with a 100% commercial loan

Using a guarantor, offering property or an asset as security can save you from putting down a deposit.

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If you're interested in a commercial loan but don't want to put up a deposit, you'll need a 100% commercial loan. It's possible, with a little bit of ingenuity.
Cash flow is a major concern for many businesses and poor cash flow is a bigger indicator of future business failure than any other factor. It makes sense, then, that business owners would be reluctant to deplete their cash reserves to put down a deposit for a commercial loan. While many businesses may be able to afford the ongoing loan repayments associated with a commercial loan, they may not have the means to put up 20–30% of the amount of the loan as a deposit in advance.

The obvious solution is a 100% commercial loan, but is this a viable option? Do any commercial lenders offer a no deposit business loan? On the face of it, it may seem as if all commercial lenders require some kind of deposit. However, by combining different loan options and essentially creating your own loan terms, you may be able to negotiate a 100% commercial loan. Here's how:

3 ways to increase the amount of a loan

Residential property

The most common way to increase the amount offered under a business loan is by offering residential property as security for the loan. This type of secured business loan will not only increase the amount of the loan but will usually attract an interest rate discount, bringing the rate down from higher commercial rates towards much more favourable residential mortgage rates.

A commercial loan secured by residential property will usually extend to up to 80% of the value of the property for a standard commercial loan and up to 90% of the value of the property for particularly strong applications, including medical practitioners, lawyers and accountants. Commercial loans secured by commercial property could fetch loan amounts of up to 70% of the value of the commercial property for standard commercial properties or up to 60% for purpose-built commercial properties like backpackers hostels or aged care facilities.

Business loan with guarantor

Another way to increase the amount of a commercial loan is to apply for a business loan with guarantor. The terms of a guarantor loan are usually very similar to a business loan secured with a residential property. This is because the guarantor, although not a true party to the loan, is putting up their own residential property as security for your business loan. Similarly to offering residential property as security, residential property offered by a guarantor will fetch a loan amount of up to 80% of the value of residential property or up to 70% of the value of commercial property.

Business assets

A final way to increase the amount of the loan is to offer your own business assets as additional security for the loan, such as suitably valued business equipment, vehicles and equipment, client books or even the goodwill in the business. Sometimes known as balance sheet lending, this form of security involves a lender extending a commercial loan against the value of the business itself. The lender will usually base their business valuation on the balance sheets of the business over the past two years and may also ask for up-to-date asset valuations.

Business assets will never trigger a 100% commercial loan by themselves, but they can lead to an increase in the amount offered under a commercial loan secured by other means.

Creating a 100% commercial loan

Combining security to increase the loan amount

Particularly strong applicants may be able to find a 100% commercial loan by offering suitably valued residential property. In most cases, though, even residential property will only fetch a maximum of 80% of the value of the property, leaving the applicant to find the remaining 20% by way of a cash deposit.

The trick to creating a 100% commercial loan is to work with a lender who is willing to combine different forms of security to increase the total amount offered under the loan. For example, your residential property may have sufficient equity to give you 70% of the value of the loan. You may then be able to introduce a guarantor who will offer their own residential property as additional security to bring the loan amount up to 100%. Alternatively, the lender may be willing to take some of your business assets, such as appropriately valued equipment or the goodwill of the business, to increase the loan amount to 100%.

Comparing lenders and loan terms

The trick to applying for a 100% commercial loan is finding a lender who is willing to accept multiple forms of security to effectively obviate the need for a deposit. Since commercial lenders are not subject to the same regulations as lenders offering residential mortgages, commercial lenders are free to impose interest rates, fees, charges and other terms as they see fit, which can vary significantly from lender to lender and depending on the circumstances of the applicant.

For this reason, it is essential to compare business loans to ensure you are speaking with lenders who are willing to take your unique circumstances into account and create a loan option that does not require a deposit, while still offering competitive interest rates, flexible loan terms and transparent fees and charges.

Consider the following when comparing lenders and loan products:

  • Interest rates. Consider the advantages and disadvantages of fixed versus variable interest rates, along with the quoted interest rates themselves.
  • Loan term. A longer loan term is not always the best option. The loan term should reflect the purpose for the loan and your intended loan repayment schedule. For example, if the purpose of the loan is to purchase commercial real estate, a long loan term could be advisable as it will help you to spread out the repayments over a longer period of time, making each payment more affordable. If the purpose of the loan is to purchase equipment without a predicted lifespan of 5 years, a 10-year loan term will see you paying off equipment that has long since expired or been fully depreciated.
  • Fees and charges. Interest rates are important but should not be the only financial consideration you make when comparing different lenders and different loan products. Whether applying for a 100% commercial loan or any other type of business loan, consider the schedule of fees to ensure that you understand the full cost of the loan before you sign on the dotted line.
  • Loan flexibility. Consider how your business' financial needs may change in the future and whether your loan term will be flexible enough to accommodate these needs. For example, does the loan allow you to pay out the remaining balance in full without penalty before the end of the original term? Or would early exit fees prevent you from exiting the loan earlier in the event of a financial windfall?

Before applying for any loan products, compare your options to make sure you understand the full cost of the loan and your obligations under the loan contract. With more and more smaller and independent lenders entering the commercial finance industry all the time, you as the applicant are in the driver's seat and have the opportunity to compare loan products and choose the solution that best fits your circumstances.

Business lenders to consider

Name Product Min. Loan Amount Max. Loan Amount Loan Term Upfront Fee Filter Values
Moula Business Loan
1 to 2 years
2% Establishment fee
A loan of up to $250,000 that can be approved and funded within 24 hours. Available to businesses with 6+ months operating history and $5,000+ monthly sales.
Swoop Finance Business Loan
1 to 30 years
Depending on your loan contract
Apply online and borrow between $1,000 and $100,000,000. Options for good and bad credit borrowers.
ebroker Business Loan
1 month to 30 years
$0 application fee
Small business loans available between $5,000 and $5,000,000. Get access to 70+ non-bank lenders on this independent platform.
Lumi Unsecured Business Loan
3 months to 3 years
2.5% establishment fee
Apply for up to $300,000 from Lumi and benefit from short loan terms, no early repayment fees and once approved receive your funds in just one business day.
Max Funding Unsecured Business Loan
1 month to 1 year
$0 application fee
An unsecured business loan from $3,000 that offers convenient pre-approval and no early repayment fees.
Valiant Finance Business Loan Broker
3 months to 5 years
$0 application fee
A Business Lending Specialist from Valiant Finance can give you access to competitive business loans from over 70 lenders. Loans between $5,000 and $1 million are available. Request a call – your loan can be funded in 1 business day.
OnDeck Business Loans
6 months to 2 years
3% of loan amount
Apply for up to $250,000 and receive your approved funds in one business day. Minimum annual turnover of $100,000 and 1 year of trading history required.
Octet Trade Finance
1 month to 2 years
Transaction fee 2.5%
Access a line of credit to pay suppliers in over 65 countries. Borrow from $200,000 up to $7 million.
Prospa Business Loan
3 months to 3 years
3% origination fee
Small business loans are available from $5,000 - $300,000 on terms of up to 3 years. At least six months trading history and a monthly turnover from $6,000 is necessary.
Westpac Business Loan
1 to 30 years
$0 application fee
Purchase a new vehicle, equipment or support your cash flow with a business finance solution from Westpac.
ANZ Secured Business Loan
Up to 15 years
Benefit from a low rate when you secure this loan with property and/or business assets. Loans from $10,000 available.
ANZ Unsecured Business Loan
Up to 15 years
Apply for a loan from $10,000 with no security required and benefit from flexible repayment terms.

Compare up to 4 providers

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