Key Takeaways
- Commercial finance in Australia is a family of products, each built for a specific scenario.
- Commercial property loans fund real estate purchases; business loans support operations and growth; construction loans fund developments; bridging loans cover short-term gaps.
- Vehicle and equipment finance funds specific assets; self managed super fund (SMSF) loans allow super to invest in property; low doc loans accommodate borrowers without standard financials.
- Matching the right product to the right purpose, term, and security profile is the most important decision a borrower makes before they look at rates.
Why Choosing the Right Product Matters
Most borrowers approach commercial finance looking for the cheapest rate. The more important question is which product fits, because the wrong product structure can cost more over the life of the loan than a small rate difference ever saves. A 25-year commercial property loan and a 3-year business loan can both fund a $500,000 transaction, but they behave very differently and suit very different situations.
Australian lenders also categorise commercial products tightly. Each product family has its own loan to value ratio (LVR) caps, term lengths, documentation requirements, and pricing approach. Trying to force a deal into the wrong product (such as using a short-term facility to fund a long-term asset) creates structural problems that quietly drain cash flow and limit flexibility over time.
This guide walks through the main types of commercial loans available in Australia, what each one is suited to, and how to decide which one fits your scenario. If you are weighing up your options across these product families, our commercial loan options at Loanworx cover the full range under one roof.
Commercial Property Loans
Commercial property loans fund the purchase, refinance, or holding of income-producing real estate. They are the most common product when borrowers refer to commercial loans in general terms.
Typical Use Cases
Investors buying offices, retail shops, warehouses, industrial units, medical suites, or mixed-use property use a commercial property loan. Business owners buying the premises their business operates from (often called owner-occupier commercial) also fall under this product family. Refinancing existing commercial property debt to access better terms or release equity is another common use.
Typical Structure
Standard commercial property LVRs sit between 65% and 75%, with specialised properties such as service stations, childcare centres, pubs, and hotels capped lower (often around 55% to 65%). Loan terms typically run 15 to 25 years, with review periods every 1 to 5 years. Both principal and interest and interest-only options are available, with interest only often used for investment property.
Who It Suits
Established business owners and investors with a clear use of funds, sufficient deposit (typically 25% to 35% of the purchase price), and the documentation to support a standard credit assessment. Self-employed borrowers with two or more years of trading history generally fit the product well.
Business Loans
Business loans fund the operations, growth, or acquisition of a business itself rather than the property or assets the business uses. They cover a wide range of purposes and structures.
Typical Use Cases
Funding inventory purchases, hiring staff, marketing campaigns, opening new locations, expanding production capacity, or acquiring another business. Working capital products such as overdrafts and lines of credit also fall under this category, designed to smooth cash flow between paying suppliers and collecting from customers.
Typical Structure
Business loans can be term loans (1 to 7 years), revolving facilities (overdrafts, lines of credit, invoice finance), or business acquisition loans for partnership buy-ins and business purchases. Loans can be unsecured, partly secured against business assets, or backed by commercial or residential property. The security position significantly influences the rate, with property-backed loans usually pricing 2% to 5% lower than unsecured ones.
Who It Suits
Established businesses with consistent trading history, clean tax positions, and a clear use of funds. Lenders look at two years of financials, year-to-date management accounts, and Business Activity Statements (BAS). Newer businesses or those with seasonal income often need to offer additional security or work with specialist lenders.
Construction and Development Loans
Construction loans fund building projects, from small renovations to multi-unit residential developments and large commercial builds. They are one of the more specialised areas of commercial lending.
Typical Use Cases
Ground-up construction of residential, commercial, or mixed-use developments. Subdivisions, major renovations, and adaptive reuse projects also fall under this category. The borrower can be an experienced developer, a builder building for resale, or an investor undertaking a single project.
Typical Structure
Construction loans are drawn down progressively, with funds released at agreed milestones such as slab, frame, lock-up, fixing, and completion. Interest is charged only on the funds drawn, not on the full approved amount. LVRs are based on the gross realisation value (GRV) of the completed project, typically 65% to 75% of GRV or 75% to 80% of total development cost, whichever is lower.
Who It Suits
Borrowers with development experience, a strong project feasibility, and (for larger projects) committed presales. First-time developers usually need to work with specialist lenders or accept tighter terms. Pricing reflects the higher risk, and approval timelines are longer than those for standard commercial property loans due to additional feasibility and project review.
Bridging Loans
Bridging loans cover short-term funding gaps, typically when a borrower needs to settle on a new property before an existing one sells, or to take advantage of an opportunity that cannot wait for longer-term finance to be arranged.
Typical Use Cases
Buying a new commercial property before selling an existing one. Settling on a development site while longer-term construction finance is being arranged. Acquiring a business opportunity quickly. Funding a deposit or transaction costs while waiting for a refinance to complete.
Typical Structure
Bridging loans typically run for 6 to 12 months, sometimes up to 24 months. They are usually interest-only or capitalised (where the interest is added to the loan balance rather than paid monthly). Rates are higher than standard commercial property loans, reflecting the short term, the speed of approval, and the higher perceived risk. A clear exit strategy (the sale of an asset, a refinance, or the completion of a development) is essential.
Who It Suits
Borrowers with a defined short-term funding need and a clear exit. Bridging is not suited to ongoing financing needs; it is a tactical product for closing a specific gap. Misusing bridging as long-term finance is one of the more expensive mistakes in commercial lending.
Vehicle Finance
Vehicle finance covers cars, light commercial vehicles, trucks, and specialised work vehicles used in a business. It is technically a form of asset finance but is often dealt with separately because of its volume and standard structure.
Typical Use Cases
Buying utes, vans, trucks, prime movers, trailers, or fleet vehicles for business use. Funding company cars for directors or staff. Replacing or upgrading existing vehicles within a fleet.
Typical Structure
Vehicle finance is usually provided as a chattel mortgage, lease, or hire purchase. Terms typically run 2 to 7 years, aligned with the vehicle’s useful life. The vehicle itself secures the loan, which usually allows 100% finance of the asset (with a deposit optional) and faster approvals than property-secured loans. Pricing depends on the asset, the borrower, and the term.
Who It Suits
Almost any active business is buying vehicles for work use. The structure is well understood by lenders, processing is quick, and approvals for established businesses are often delivered within days. The choice between a chattel mortgage, a lease, and a hire purchase depends on tax treatment and the borrower’s preferred accounting outcome (worth discussing with an accountant).
Equipment and Asset Finance
Equipment finance funds plant, machinery, medical equipment, technology, and other specialised business assets. It applies the same logic as vehicle finance but across a wider range of assets and price points.
Typical Use Cases
Buying manufacturing machinery, construction equipment (excavators, loaders, cranes), medical and dental equipment, agricultural machinery, IT infrastructure, or specialised commercial kitchen equipment. Both new and used assets can be financed, with terms aligned to the asset’s useful life.
Typical Structure
Equipment finance is typically structured as a chattel mortgage, lease, or hire purchase, similar to vehicle finance. Terms typically run 2 to 7 years for most equipment, sometimes longer for heavy or long-life assets. The equipment secures the loan, which often enables fast approvals and minimal documentation, particularly for established businesses purchasing mainstream assets.
Who It Suits
Businesses with a specific equipment purchase to fund, who want to preserve cash flow and working capital lines for trading. Equipment finance is also often more tax-efficient than paying for equipment outright, since interest and depreciation can usually be claimed. Talking through the structure with an accountant before committing is generally worthwhile.
SMSF Commercial Loans
SMSF commercial loans allow a self managed super fund to borrow to buy commercial property under a limited recourse borrowing arrangement (LRBA). They are a specialist area of lending governed by both lending policy and superannuation law.
Typical Use Cases
The most common scenario is a business owner using their SMSF to buy the premises their business operates from, with the business paying rent to the fund. Other scenarios include diversified SMSF investment portfolios that include commercial property alongside other assets.
Typical Structure
An SMSF commercial loan operates under an LRBA, which means the lender’s recourse is limited to the property itself rather than the wider fund. LVRs are typically tighter than standard commercial property loans (often capped at around 65% to 70%); terms can run up to 30 years; and rates are usually slightly higher to reflect the limited-recourse structure. The SMSF must be able to demonstrate that the loan is consistent with its investment strategy and sole purpose test.
Who It Suits
SMSF trustees with a clear investment strategy, sufficient fund balance to support the purchase, and ideally a long-term holding intention. Specialist advice is essential because the rules around related-party transactions, market-rate rent, and ongoing compliance are strict. Not all lenders are active in this market, and structures vary noticeably between those who are.
Low Doc Commercial Loans
Low-doc commercial loans accommodate borrowers who cannot provide the full suite of standard financials, typically due to timing, structure, or recent business changes. They are not designed to bypass assessment but to allow lenders to assess on alternative evidence.
Typical Use Cases
Self-employed borrowers without two full years of tax returns (because they are newly established, recently restructured, or behind on tax returns). Borrowers whose income looks low on paper because of tax planning, despite a strong underlying cash flow. Property investors whose individual tax returns do not reflect the income generated by the holding entity.
Typical Structure
Low-doc commercial loans use alternative income verification, such as BAS, bank statements, accountant’s declarations, or rental income from leases. LVRs are usually tighter (often capped around 65% to 70%), and pricing sometimes reflects the additional risk. Specialist non-bank lenders dominate this part of the market, although some second-tier banks offer similar products under different names.
Who It Suits
Borrowers with strong underlying cash flow but documentation challenges. Low-doc lending is not a way around lender scrutiny, as lenders still assess affordability and security carefully. It works best for clean, well-presented deals where the alternative evidence makes a credible case for serviceability.
Matching the Product to Your Scenario
With so many product families available, the right starting point is the scenario, not the product. A few practical questions help quickly narrow the field.
What Is the Money For?
Buying property suggests a commercial property loan. Funding operations suggests a business loan. Building or developing suggests construction finance. Buying a specific asset suggests vehicle or equipment finance. Buying through a superfund suggests an SMSF loan. Bridging a short-term gap suggests a bridging loan. Naming the purpose first prevents most product mismatches.
How Long Do You Need the Money For?
Short-term needs (days to a couple of years) are suited to revolving facilities, bridging, and short-term business loans. Long-term commitments (5 years or more) suit commercial property loans, SMSF loans, and term business loans. Matching the term to the purpose is one of the most important structural decisions in commercial finance.
What Security Can You Offer?
If commercial or residential property is available as security, the deal usually accesses better terms across most product families. If only business assets or the asset being purchased is available, asset finance and partly unsecured business loans become the natural fit. Security availability often shapes the product choice as much as the purpose does.
How Clean Is Your Documentation?
Standard documentation (two or more years of tax returns, current management accounts, clean ATO position) opens the full lender market. Gaps in documentation push the deal toward low doc products or specialist lenders. Recognising this upfront avoids wasted applications with lenders whose policy does not match the file.
Where to Start When You Are Choosing
Borrowers often try to compare commercial products by rate alone before deciding which product family fits. Reversing that order, by deciding on the product first, then comparing options within it, produces materially better outcomes.
The Australian Government’s overview of business funding options at business.gov.au is a useful starting point for understanding the broad categories of commercial finance, including loans, lines of credit, and asset finance, and how each one is typically used.
Going Deeper on Commercial Mechanics
Once you have identified which product family fits, the next question is usually how the loan works in practice (security, repayment structures, rate setting, and the full approval sequence). Our guide to commercial loans in Melbourne walks through the lender landscape and how structure usually matters more than the headline rate.
Frequently Asked Questions (FAQs)
1. Can I combine different types of commercial loans?
Yes, and it is common. A business buying its own premises might use a commercial property loan for the building, an equipment finance facility for plant and machinery, and an overdraft for working capital. Lenders structure these as separate products to keep the assessment, term, and pricing of each piece aligned with its purpose.
2. Which type of commercial loan has the lowest interest rate?
Generally, commercial property loans secured by standard metropolitan property carry the lowest rates because the security is high quality and well understood by lenders. Vehicle and equipment finance can also be competitively priced, especially for new assets. Unsecured business loans, bridging loans, and low-doc products typically sit at the higher end of the commercial range due to the additional risk involved.
3. What is the easiest type of commercial loan to get approved for?
Vehicle and equipment finance are usually the most accessible because the asset itself secures the loan, the structure is standardised, and many lenders specialise in fast approvals. For established businesses buying mainstream assets, approvals can be delivered within days. Commercial property loans and business acquisition loans typically take longer because of the deeper assessment involved.
4. Do I need property to get a commercial loan?
Not always. Vehicle finance, equipment finance, unsecured business loans, debtor finance, and invoice finance can all be arranged without property security. However, having property available, whether commercial or residential, usually unlocks better pricing and longer terms across most product families.
5. Can I get an SMSF loan for any commercial property?
SMSF commercial lending is available for most income-producing commercial properties, but lender policy can vary. Specialised properties such as service stations, hotels, and pubs are often excluded. The property must also meet the SMSF’s investment strategy and the sole purpose test under superannuation law. Specialist advice is essential before committing.
6. How is a bridging loan different from a standard commercial loan?
A bridging loan is short-term (typically 6 to 12 months) and designed to close a gap, with a clear exit strategy such as the sale of an asset or a refinance. A standard commercial loan is long-term (typically 5 to 25 years) and designed to support ongoing ownership of an asset or business. Bridging carries higher rates to reflect the short term and the speed of approval; using it for ongoing financing is generally a costly mistake.
7. When should I consider a low doc commercial loan?
Low-doc commercial loans suit borrowers with strong underlying cash flow but documentation challenges, such as recent business restructurings, missing tax returns, or income that does not clearly show on personal returns. They are not designed to bypass scrutiny; they substitute alternative evidence (BAS, bank statements, accountant declarations) for standard financials. Pricing and LVRs reflect the additional risk.
The Bottom Line
Commercial finance in Australia is broader than most borrowers initially expect. Commercial property loans, business loans, construction finance, bridging, vehicle finance, equipment finance, SMSF loans, and low doc options each serve a different scenario, with their own term, security, and pricing logic. Choosing the right product is not about finding the lowest rate; it is about matching the structure to your purpose, your security position, and your longer-term plans.
For most business owners and investors, the smartest first step is to clearly name the scenario, then determine which product family fits. Working with a broker familiar with the full range of commercial lending generally produces a tighter shortlist of lenders and a faster path to approval than starting with rate comparisons in isolation.
