Commercial Lending Advice
Commercial lending works differently to home lending. There is no standard product, less published pricing, and far more variation between lenders in what they will accept as security and how they assess a business. Two lenders can look at the same business and reach entirely different conclusions. Knowing which ones to approach, and how to present the case, tends to matter more than the rate on offer.
What commercial lending advice involves
Commercial finance is a broad category rather than a single product. It includes borrowing to buy business premises, to fund equipment or vehicles, to manage cash flow, to acquire a business, or to fund a development. Each has its own lenders, its own security requirements and its own assessment approach.
Unlike home lending, commercial lending is largely negotiated rather than advertised. Terms, pricing and conditions vary based on the strength of the business and how the application is presented.
How a mortgage broker helps with commercial lending
Commercial property purchase
Buying the premises your business operates from, or buying commercial property as an investment. Deposit requirements are generally higher than residential, loan terms are often shorter, and lenders assess the property type and the tenant closely.
Equipment and asset finance
Vehicles, machinery, fit out and plant. Often structured so the asset itself is the security, which can preserve your other borrowing capacity.
Working capital and cash flow
Overdrafts, lines of credit, invoice finance and trade finance. Useful where the business is profitable but the timing of money in and money out does not line up.
Business acquisition
Borrowing to buy a business, or to buy out a partner. Lenders look closely at the business being acquired, not just at the borrower, and goodwill is treated very differently to physical assets.
Development and construction
Progressive drawdown against a build. Assessment focuses on the project, the builder and the exit, and requirements are considerably more detailed than for a standard purchase.
Presenting the application
More than in any other type of lending, commercial outcomes depend on how the case is put. Lenders assess a business on its financial statements, its industry, its history and its prospects, and a well prepared submission that answers the obvious questions in advance produces better results than one that does not.
Speak to our experienced team today.
Commercial lending by situation
1 – You are buying the premises your business operates from
Often cheaper over time than leasing, and a decision with tax and structural consequences worth discussing with your accountant first.
2 – Your lease is ending and the landlord is selling
A common trigger, usually with a deadline attached.
3 – You need equipment and do not want to use cash
Asset finance keeps working capital available and can be structured so it does not consume your broader borrowing capacity.
4 – Your business is profitable but cash flow is tight
Usually a timing problem rather than a profitability one, and there are products built specifically for it.
5 – You are buying out a business partner
Lenders treat this differently to an expansion, and the structure of the buyout affects what is available.
6 – You are self employed and your accounts do not tell the whole story
Legitimate tax minimisation can make a business look weaker on paper than it is. Some lenders account for this better than others.
7 – You have been declined by your bank
A decline from one lender says very little about what another would do, particularly in commercial lending where assessment approaches vary widely.
Who this is for
- Business owners buying or refinancing commercial premises
- Businesses funding equipment, vehicles or a fit out
- Profitable businesses with cash flow timing pressure
- Buyers acquiring a business or buying out a partner
Who this isn’t for
- Businesses in serious financial distress. Free financial counselling and restructuring advice are better first steps, and we will point you towards them.
- Anyone wanting advice on whether to buy a particular business. That is a question for your accountant and solicitor.
Our advice process
01 Evaluation
02 Discovery
03 Strategy
04 Implementation
05 Review
Commercial Lending FAQs
How is commercial lending different to a home loan?
Commercial lending is largely negotiated rather than advertised. Deposit requirements are generally higher, loan terms are often shorter, pricing is less standardised, and lenders assess the business itself rather than just the borrower’s income. There is also far more variation between lenders in what they will accept and how they assess it.
How much deposit do I need for a commercial property?
Generally more than for a residential purchase, and it varies by lender, by property type and by whether your own business will occupy the premises. Owner occupied commercial purchases are often treated more favourably than investment purchases, because the lender can assess the business as well as the property.
Can I use my home as security for a business loan?
Often yes, and it is worth understanding the consequence before you do. Using your home as security may improve the terms available, and it also puts your home at risk if the business does not perform. Whether it is the right decision depends on the business, the amount and the alternatives.
What documents will a lender want?
Typically business financial statements covering a period, tax returns, bank statements, details of existing debts, and information about the security. Development and acquisition finance require considerably more. Having these in order before applying makes a material difference to both speed and outcome
Can I get commercial finance if my business is new?
It is harder, because most lenders want to see trading history, but it is not always impossible. Options may include stronger security, a larger deposit, or asset finance where the asset itself is the security. The fewer years of history, the more the security and the deposit carry the case.
What is asset finance?
Finance where the asset being purchased, such as a vehicle or piece of equipment, acts as the security for the loan. It is common for business equipment and often keeps other borrowing capacity available for things that cannot be secured this way.
My bank declined my application. Is that the end of it?
Not necessarily. Lenders differ substantially in what they will accept, particularly in commercial lending, and one decline says little about what another would do. It is worth understanding why the decline happened, because the reason determines whether another lender is likely to reach a different conclusion.
Do you charge a fee for commercial lending?
Commercial lending is sometimes fee for service rather than commission based, depending on the complexity and the lender. Any fee payable by you is disclosed and agreed in writing before work begins, and you will not be charged anything you have not agreed to.