An SMSF commercial property loan lets a self-managed super fund (SMSF) borrow to acquire commercial property it can’t fund outright from member balances. The fund borrows under a limited recourse borrowing arrangement (LRBA), the property is held in a separate bare trust until the loan is repaid, and every part of the transaction has to satisfy superannuation law as well as standard lender credit policy.
Commercial property has one major advantage over residential inside super: an SMSF can buy the premises your own business operates from and lease them back to the business at arm’s-length commercial rent, because the property qualifies as business real property. That makes owner-occupier business premises the most common SMSF commercial purchase, alongside genuine arm’s-length investment property.
At Loanworx, we arrange SMSF commercial property loans for trustees buying their own premises, acquiring investment property, or refinancing an existing LRBA. As a specialist finance broker, we work alongside your accountant and SMSF adviser so the loan, the fund and the property all line up before any contract is signed.
Looking at premises for your business, an investment, or refinancing an existing SMSF loan? Call us on 1300 562 696 or get in touch and we’ll be back to you shortly.
An SMSF commercial loan is wrapped inside a specific structure that ring-fences the lender’s recourse to the property itself. Here are the moving parts.
The fund borrows under an LRBA, which limits the lender’s recovery in a default to the single property held under the arrangement. The rest of the fund’s assets are protected, which is also why SMSF loan-to-value ratios are tighter and rates sit a little higher than standard commercial lending.
The property is held in a separate bare trust, usually with its own corporate trustee, while the loan is on foot. The fund holds the beneficial interest, receives the rent and makes the repayments, and takes legal title once the loan is repaid.
Unlike residential, an SMSF can buy commercial premises and lease them back to your own operating business, provided it’s business real property leased at arm’s-length commercial rent. This is the most common reason businesses use SMSF commercial loans.
Holding commercial property in an SMSF can suit trustees who want their super invested in property they understand, with rent and any growth accruing inside the fund’s concessional tax environment. It works for owner-occupier business premises and for genuine arm’s-length investment property alike.
We assess your fund and the proposed property against the active SMSF commercial lender panel, match you to a lender comfortable with your scenario, and coordinate the loan and bare trust so the structure is sound before you commit. We work in step with your accountant and SMSF adviser rather than around them.
An SMSF purchase is one of several ways to acquire or fund commercial property through us. Explore our other commercial services below to find the right fit.
Vehicle and fleet finance through chattel mortgage, lease or hire purchase, structured for your cash flow and tax position.
Short-term finance to bridge the gap between buying and selling, or to cover a timing shortfall.
Funding to buy a business or practice, including goodwill where the deal and lender support it.
Finance to acquire or refinance commercial investment property across office, retail, industrial and specialised assets.
Funding for residential and commercial development, from small builds through to multi-stage projects.
Review and refinance existing commercial debt to sharpen the rate, release equity or restructure the facility.
Overdrafts, lines of credit and cash-flow facilities sized to your real working capital cycle.
Lenders assess the fund first, the property second, and the members’ wider position third. These are the factors that weigh most heavily.
The SMSF needs to be a complying fund with an ABN, a trust deed that permits borrowing, and usually a corporate trustee. The bare trust must be in place before settlement, with its own trustee and deed.
Getting these in order early is often what keeps an SMSF settlement on track.
LVRs are tighter than standard lending because of the limited recourse structure. As an industry guide, owner-occupier business premises are commonly funded up to around 80%, and arm’s-length investment up to about 65% to 75%.
The fund also needs enough left over after the deposit and costs, which often becomes the binding constraint.
Lenders want a meaningful balance left in the fund after settlement to cover a vacancy, repairs or a few months of repayments, commonly 10% to 20% of the property value as a working guide.
We plan the buffer in from the start so the fund isn’t left exposed.
Lenders model the net rent against the repayments. For owner-occupier scenarios the rent is set by the trustees within market range; for investments it’s whatever the market lease produces.
A debt service coverage ratio of around 1.2 to 1.4 times is a common starting benchmark.
The fund’s written investment strategy needs to accommodate the purchase, and lenders increasingly ask to see it. Most SMSF loans also require personal guarantees from members, so lenders consider members’ personal positions. The property must be commercial in nature and, for lease-back, qualify as business real property leased at arm’s length. We flag anything outside policy before lodgement.
Commercial finance isn’t only about the headline rate. It’s about being matched to a lender that will approve you, structuring the facility so it suits the business long term, and having someone manage the process. Here’s what working with us looks like.
We compare commercial facilities across a broad panel of major banks, second-tier lenders, non-bank funders and specialist commercial lenders, so you see a genuine spread of options. We match the deal to the lender most likely to approve it at a competitive rate, which often isn’t your everyday bank.
You deal with experienced brokers who expect to see trusts, companies, partnerships, partner distributions and complex security, and who know how to present your structure to a lender accurately rather than force-fitting it into a generic application.
From the first conversation to settlement, we prepare the submission, liaise with the lender, coordinate with your accountant and solicitor, and keep you updated at each stage, so the deal keeps moving and you’re never chasing it.
For most commercial transactions, Loanworx is paid an upfront and trail commission by the lender after settlement, and that commission typically does not change the rate or fees you pay. For more complex scenarios a fee for service may apply, and we’ll disclose it in writing before any work begins. No surprises.
Yes, if the property qualifies as business real property, meaning real property used wholly and exclusively in one or more businesses. The SMSF buys the premises at market value and leases them back to your operating business at arm’s-length commercial rent under a written lease. This is one of the limited circumstances where an SMSF can acquire property from a related party, and it’s the most common reason businesses use SMSF commercial loans.
It depends on the scenario. For owner-occupier business premises, LVRs of up to around 80% are commonly available, with some specialists going higher for qualifying cases. For arm’s-length commercial investment, LVRs typically sit at 65% to 75%, and specialised assets lower. The fund also needs to retain a sensible liquidity buffer after the deposit and costs, which often becomes the binding constraint rather than the headline LVR.
Because the limited recourse structure caps the lender’s recovery to the single property held under the LRBA; the rest of the fund’s assets are off limits. From the lender’s perspective that’s a tighter security position than a standard commercial loan, so pricing tends to reflect that, often running a little higher depending on the lender and the scenario.
Not strictly, but most lenders strongly prefer it for an LRBA and some require it. A corporate trustee makes the fund cleaner to administer and easier to reference in loan documentation. If your SMSF has individual trustees, switching to a corporate trustee before applying often makes the application materially easier and can open up additional lenders.
Generally no. Borrowed money under an LRBA can fund the acquisition, repairs and maintenance, but not improvements that fundamentally change the character of the property. Substantial improvements usually need to be funded from existing SMSF cash, and care is needed so the work doesn’t push the property into a different asset under ATO rulings. We flag this early if you’re considering anything beyond like-for-like repairs.
Yes. SMSF commercial lending sits across finance, tax and superannuation law, and no single profession covers all of it. We arrange the loan, your solicitor sets up the bare trust, your accountant administers the fund, and your SMSF adviser handles strategy. If you don’t have an SMSF adviser, we can point you to trusted professionals. Going ahead without them isn’t a shortcut we’d recommend.
Talk through your scenario with a specialist commercial broker, with no cost and no obligation. Call us on 1300 562 696 or get in touch and we’ll be back to you shortly, ready to map out what’s possible for your business.
Disclaimer: The information provided here is general in nature and should not be considered financial, tax or legal advice. You should consult your professional advisers, such as your accountant, solicitor and financial planner, to see whether a particular finance strategy is suitable for your business, ahead of a discussion with us that will be limited to how to arrange any funding required.
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