Commercial loans

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Valiant Finance works with a large panel of lenders that can help you find a loan for your business.

• Access to 60+ lenders
• Dedicated credit specialists
• Various loan options available

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What is a commercial loan?

A commercial loan is a type of finance that can be taken out by individuals, partnerships, discretionary trusts and other groups, on behalf of a business or company. These loans are used to fund commercial operations that can help grow and develop a business, whereas a commercial property loan is a specific type of business loan that is used to fund the purchase of a property to be used for commercial purposes.

How do commercial loans work?

Commercial loans work much the same as other loan types but are specifically used for business purposes. They can be taken out by individuals or partnerships on behalf of businesses to fund operations, equipment and commercial property. As the loan amount will be used to invest in the business, the financials of that business will be taken into account when the lender is deciding whether to approve the loan.

There are also various benefits to commercial loans, as they are tailored for use by businesses. They offer flexible repayment options to support fluctuations in cash flow and the loan amounts on offer are usually much higher than with other loans. There are also related products specifically designed for commercial purposes, such as leasing finance.

What are the differences in purchasing commercial and residential properties?

The purchase of residential property is a more familiar process, so it's useful to know the key differences you'll encounter when purchasing commercial properties. These include:

• Buying a commercial property involves paying goods and services tax (GST), which can increase the cost of the property by 10%. You can reclaim this as an "input tax credit" against the GST charged on the property's rent, but you still need to pay it up-front.
• Residential leases typically have a term of 6 to 12 months, while commercial property leases run for longer terms.
• Commercial properties feature longer vacancy periods and the lessee bears the costs of maintenance, rates and repairs. This means you get to pocket more of the rent as profit. In residential properties, the property owner is responsible for these expenses.
• Commercial properties used for running a business are subject to capital gains tax (CGT) when sold. To determine your capital gain (or loss), you will need to possess records of the date and costs of purchasing the property.

How should you compare commercial property loans?

• Loan terms. The loan terms are different for each lender and will generally be between one and seven years. You will often find terms between one and five years for fixed rate loans and one and seven years for variable rate loans.
• Loan amount. The loan amount for commercial loans is usually larger than other loans, with the amount you're approved for depending on what the lender thinks the business will be able to afford to pay back.
• Interest rate. Depending on the age and size of your business, as well as your credit history, you may receive a better commercial interest rate on a commercial property loan than on a standard business loan.
• Fees. As with other terms of finance, there are various fees and charges that you need to take into consideration. You should take a look at the up-front fees that you may need to pay to apply for and establish the loan, as well as any ongoing fees you may need to pay for account maintenance.
• Repayments. Most lenders that offer commercial loans offer flexible repayment solutions so the loan will not impact too heavily on the business's cash flow. Take a look at the repayment options that are available, such as whether the lender allows for interest-only repayments for seasonal lows.

What loan can help you purchase a commercial property?

Investing in commercial real estate has several benefits, but it involves a significant investment on your part. Here are the types of loans available to you if you're looking for finance:

Commercial loans for purchasing or refinancing commercial property

These loans are an option if you're buying your first commercial property or refinancing an existing loan. They're ideal for purchasing an investment or occupied commercial property.

Property development and construction loans

These loans are useful for constructing commercial properties, residences and sub-divisions. You could use one for completing a development project and selling the assets to repay your loan.

Sub-division finance

Sub-dividing land lets you increase the value of your property without constructing anything on it, but these loans can be used for construction purposes too.

Mezzanine debt finance

You can use mezzanine financing to complete a project, complete an expansion or to borrow additional capital. This type of loan is normally taken out when a bank loan falls short of providing the full financing you need. Typically, lenders provide the funding based on the property's assets and the projected equity.

Commercial loans for buying or refinancing a business

If you want to purchase an existing business or a successful franchise, you'll need to consider the business history, the value of the tangible assets, the estimated value of the intangible assets and the ability to yield good returns on investment. People generally use these business loans or term loans to invest in an existing business.

Factory finance

These loans are useful for keeping organisations in business by helping them purchase equipment and technology. From production equipment to packaging materials, this loan can help you utilise your capital to meet other expenses while funding your working capital requirements.

Land bank finance

If you view abandoned properties and vacant lots as assets, these loans are ideal. They let you create, hold and develop vacant properties, then convert them into marketable assets that can double or triple your investment.

Rural property loans

If you want to purchase property in a rural region, these loans are designed for that purpose. You could use them to purchase a property or to consolidate your debts.

Commercial loan comparison

• Bigstone Small Business Loan: Borrow up to $5,000,000 for 12 months to 5 years. A peer-to-peer commercial loan that allows businesses to access the funds they need.
• GetCapital Business Loans: Borrow up to $750,000 for 12 months to 3 years. A flexible business loan product suitable for a range of purposes.
• Max Funding Unsecured Business Loan: Borrow up to $300,000 for 1 month to 1 year. Use the funds for a range of different purposes.
• Business Fuel Loans: Borrow up to $200,000 for 3 months to 1.5 years. Allows small- to medium-sized businesses to expand their operations, renovate offices, invest in advertising and marketing or assist with cash flow.
• NAB QuickBiz Loan: Borrow up to $100,000 for 1 to 3 years. A commercial loan with no security required and if you link 12 months of your business's finance data you can get a response in 60 seconds.

One alternative to commercial loans is business credit cards. Check out our comparison to find the right one for you.

What other types of commercial loans are available?

• Line of credit
  A line of credit works as a standby loan for the business, whereby the business can access up to a pre-set limit with the lender. You won't pay interest on this account until you use the available credit, but you may be charged fees for the account.
• Overdraft facility
  An overdraft facility is something that is linked to your business's current bank account and allows you to withdraw over the available balance. This financing option is usually used to assist with cash flow problems in businesses and you often won't be charged until you use the facility.
• Chattel mortgage
  This is a type of commercial finance which is used to purchase a vehicle. You will be lent the money to purchase a vehicle for business purposes and the lender will take out a mortgage on the vehicle for added security. You will have ownership of the vehicle and once the loan is repaid, the mortgage will be removed.
• Leasing finance
  This type of loan can help you lease out commercial equipment for your business operations. Whether it be equipment for the long term or short term, you can look at loan options to help you finance a lease for small and large business equipment of all types.
• Business term loans
  These are standard loans where you can borrow an amount for a set period of time. Repayments usually comprise of a portion of your principal plus the accrued interest and fees. They can be fixed or variable. These loans are designed to help boost capital for business investments.

Benefits and drawbacks of commercial loans

Is there anything else to consider before applying?

As this is a commercial loan, any defaults will be listed on your business's credit file and could seriously impact the future profitability of your business. Ensure that you don't apply for a loan that your business won't be able to pay back and that you have a solid financial plan of how you'll incorporate the added expense of the loan repayments into your business budget.

Commercial loans comparison

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Name	Product	Min. Loan Amount	Max. Loan Amount	Loan Term	Upfront Fee	Filter Values
Valiant Finance Business Loan Broker		$5,000	$1,000,000	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.	Enquire now	Compare	loading Fetching your data...
OnDeck Business Loans		$10,000	$250,000	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.	Go to site More Info	Compare	loading Fetching your data...
Prospa Business Loan		$5,000	$300,000	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.	Go to site More Info	Compare	loading Fetching your data...

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