Article:

Easy access for commercial property investment debt

19 July 2021

Darren Stacey, National Leader, Finance Solutions
Partner, Debt Advisory
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A few weeks ago, we shared insights about how financiers are continuing to evolve and provide innovative solutions for those wanting to buy smaller commercial properties. Several banks are now taking further steps to make this process even simpler when buying commercial investment properties.

Some financiers have new streamlined processes in place to access debt to purchase or refinance these properties. Where a property is leased and the income from the lease is sufficient to meet the loan servicing requirements, a loan application can be processed in just a matter of days.

What information does the financier require?

In a bid to make it easier to own a commercial property, the financier requires the following information in order to process the loan application in a timely manner:

  • Tenancy schedule
  • Copy of the lease(s)
  • Clear ATO tax portals
  • Valuations - in most cases
  • Bank statements (if refinancing).

The key benefit in the new process is understanding what is not needed. Unlike most business loan applications, financiers can now assess the loans without needing:

  • The personal asset and liability statement of the directors/owners
  • The balance sheet or profit and loss statements of the borrower
  • Tax returns.

What is the loan criteria?

To access this simplified process, the key loan criteria is:

  • A non-trading company or company as trustee borrower
  • Non-specialised commercial property or multi-unit residential property are acceptable security
  • Arm’s length tenant(s)

Importantly, loans are subject up to $3.0m in debt and maximum loan to value ratios (LVR) apply.

What are the benefits of the loan?

Loans can be written for up to 25 years with up to three years interest only, providing flexibility in relation to servicing requirements. Additionally, current actual interest rates are used in the serviceability assessment without adding extra buffers.

Fixed and variable rate options are available.

Please contact a member of our Finance Solutions team if you would like assistance in getting a loan to purchase or refinance your commercial investment property