The short verdict
For most Australian owners buying their own premises, the best commercial property loan is a full-doc term loan secured by the property itself, because long money suits a long-lived asset and security keeps total cost down. Self-employed owners without up-to-date financials often do better with a specialist non-bank loan. Short caveat or bridging loans only suit a settlement deadline with a clear way out.
At a glance
- Match a long-lived asset with a long-term loan secured by that property.
- Lenders usually advance a smaller share of value against commercial property than against a home.
- Home equity can top up a deposit, but it puts the family home on the line.
- Bridging and caveat loans are a tool for deadlines, not for holding a building.
- Security
- The premises, sometimes plus residential property
- Typical documents
- Financials or BAS, contract of sale, valuation, ID
- Who it suits
- Owners buying premises or releasing equity in property they hold
- Speed in words
- Weeks rather than days; valuation and legal steps set the pace
A commercial property loan is borrowing secured by a non-residential building: a shop, office, warehouse, factory unit or medical suite. Owners use one to buy their own premises, or to release equity from premises they already hold. Choosing the best commercial property loan in Australia comes down to matching the loan’s term and security to an asset you’ll own for a long time.
Who is a commercial property loan really for?
It’s for owners who expect to occupy a building for years and want the rent they would otherwise pay to build equity instead. Business.gov.au’s buy-or-lease comparison puts the trade-off plainly: buying costs more upfront (deposit, stamp duty and legal fees) and adds maintenance and rates, but builds equity and gives you full control of the space. Leasing is cheaper to enter and easier to leave.
The second group is owners who already hold commercial property and want to borrow against it for a business purpose, such as buying equipment, acquiring a competitor or clearing a tax debt. For them the question is less about the building and more about which mortgage position and term suit the job.
What do lenders look for in a commercial property loan?
Lenders judge two things at once: the property and the business that will repay. On the property side, they care about location, type, how easily it would sell, and the valuation. A standard warehouse unit in a busy industrial estate is far easier to lend against than a specialised building such as a car wash or a rural service station.
On the business side, they want evidence that repayments are affordable from trading income:
- Recent financial statements and tax returns, or BAS and bank statements for alternative-documentation loans.
- A clear picture of existing debts, including any ATO arrangements.
- The contract of sale and, for a purchase, where the deposit and costs are coming from.
- Director identification and, usually, personal guarantees.
Expect a lender to advance a smaller share of the property’s value than a home lender would. That gap is why many owners bring residential equity into the deal. The Reserve Bank’s October 2025 Bulletin notes that residential property secures a large share of small business lending in Australia, and premises purchases are a big reason.
Which commercial property loan structures are best?
We graded four common structures against the five tests from how we judge, for an owner buying premises they will occupy.
| Structure | Total cost | Fit to the job | Security | Flexibility | Paperwork |
|---|---|---|---|---|---|
| Full-doc term loan (bank or major non-bank) | Strong | Strong | Fair | Fair | Weak |
| Specialist non-bank or alt-doc loan | Fair | Strong | Fair | Fair | Fair |
| Premises loan plus residential equity top-up | Fair | Strong | Weak | Fair | Weak |
| Bridging or caveat loan to settle | Weak | Weak | Fair | Fair | Strong |
1. Our pick: a full-doc term loan secured by the premises
When your financials are current and the property is mainstream, a long-term loan secured by the building is the strongest choice. Long money for a long asset keeps repayments manageable, and the security keeps the cost per dollar borrowed low compared with other business finance. The downside is paperwork: full financials, a formal valuation and legal work, and a process that runs in weeks.
2. Runner-up: a specialist non-bank or alternative-documentation loan
If your tax returns are behind, your income is lumpy, or the business is younger than a bank likes, a specialist lender that assesses on BAS, bank statements or an accountant’s letter can be the better fit. It usually costs more than the full-doc route. Many owners use it for a year or two, tidy their financials, then refinance.
3. Worth a look: premises loan with a residential equity top-up
Adding a second property as security can bridge a deposit gap and, in some cases, lift the amount on offer. It works, but it means your home stands behind a business purchase. Do it with eyes open and a plan to release the home from the loan once the premises have gained equity.
4. Not for holding: bridging or caveat loans
Short-term property-secured loans are quick to arrange relative to a full-doc loan, and they have a place, for example when settlement is due before long-term finance is ready. Read our bridging loans verdict for when that makes sense. As the main loan on a building you plan to keep, they fail on cost and fit.
Our verdict
Our verdict on commercial property loans
- Best for
- Established owners with current financials buying mainstream premises they'll occupy for years: a long-term loan secured by the property.
- Not for
- Using short-term caveat or bridging finance as the permanent loan, or stretching to buy a specialised building on thin trading.
- Check before you sign
- The facility's term and review date, total repayable in dollars, valuation and legal fees, break costs on any fixed period, and what happens to the home if it's added as security.
Not sure which column you fall into? Get a straight answer on your premises plan from a specialist, without a credit check at the enquiry stage.
How much can you borrow against commercial property?
The amount depends on the property’s value, the share of that value the lender will advance, your existing debt on it and the repayments your trading can carry. Property-secured business loans we can help with run from $20,000 to $5,000,000, using residential or commercial security, through first mortgages, second mortgages and caveat loans.
For larger purchases, see our verdict on business loans over a million dollars. If you already own property and are weighing up how to use it, the best loan when you own property walks through the options.
Illustrative example: a joinery business buys its factory unit
Illustrative only. A joinery business has rented the same factory unit for eight years. The owner is offered the chance to buy it for $1,000,000. Financials are up to date, and the business has steady contracts with builders.
- Main loan: a long-term loan of $700,000 secured by the factory unit.
- Deposit and costs: $200,000 from business savings, plus $150,000 released from equity in the owners’ home to cover the rest of the deposit, stamp duty and legal fees.
- Settlement timing: the vendor wants to settle in six weeks, which the main lender can meet because the paperwork was ready before the contract was signed.
Verdict for this owner: a full-doc premises loan, with a short-term residential top-up they plan to pay down within a few years. No bridging loan needed, because preparation removed the deadline problem.
What costs should you compare besides the interest?
Interest is only part of the total cost. On a commercial purchase, also compare:
- Establishment and valuation fees, which vary widely between lenders.
- Legal costs for both the purchase and the mortgage documents.
- Stamp duty, which is set by your state or territory revenue office and is payable on the purchase, not the loan.
- Break costs if you fix the rate and later sell or refinance.
- Review conditions that let a lender reprice or call in the loan at the end of a term.
Put the offers side by side in the total cost comparer so you’re comparing dollars, not headlines.
Is buying premises right for your business?
Buying makes most sense when your location is a long-term asset for the business, your trading is stable, and the deposit won’t drain the cash you need to operate. It makes less sense if you might outgrow the space soon, or if the purchase would leave you with no buffer for a slow quarter. A second mortgage over property you already hold can sometimes fund growth without buying anything at all.
Ready to see what you could borrow?
If you’re buying premises or want to unlock equity in a building you own, start your 60-second enquiry and a specialist will look at the property, your trading and the right structure.
There’s no credit check when you first make contact, your details stay with the one person handling your file rather than being handed to a queue of lenders, and you’ll talk to a human. Give us accurate figures for the property value and existing debts, and we can match you properly the first time. More verdicts by situation and industry are on the best business loans hub.
Questions owners ask
What deposit do I need for a commercial property loan?
It depends on the property, its location and your financials, but expect a larger contribution than for a home loan, because lenders usually advance a smaller share of value against commercial security. Some owners use equity in residential property to cover part of the gap. Stamp duty and legal costs also have to be funded.
Can I buy commercial property through my business?
Yes. Many owners buy premises in a company or trust name, with the directors guaranteeing the loan. How you structure ownership affects tax, asset protection and how the lender assesses you, so settle it with your accountant before you sign the contract of sale.
Is it better to buy or lease business premises?
Buying builds equity and gives you control over the space, but ties up capital and adds stamp duty, legal fees, maintenance and rates. Leasing keeps cash free and makes moving easier. Business.gov.au sets out the trade-offs side by side. Buying suits stable businesses planning to stay for many years.
Can I borrow against commercial property I already own?
Usually, yes. A first or second mortgage over commercial property can fund business needs such as equipment, a purchase or an ATO debt. Property-secured business loans range from $20,000 to $5,000,000 against residential or commercial security, depending on the property's value and existing debt.
Why do some commercial property loans have shorter terms than home loans?
Commercial loans are often written for shorter terms and reviewed periodically, because the lender is relying on a business and a property type that can change in value faster than housing. Ask how long the facility runs, what happens at review, and whether the loan can be extended.
Are bridging loans good for buying commercial property?
Only for a short gap, such as settling before a long-term loan is approved or before another property sells. They cost more over time and need a clear exit. Using one to hold a building indefinitely is one of the more expensive mistakes owners make.
Reviewed by the Best Biz Loan editorial team · updated 5 October 2026
We judge loan structures and lender types against the same five tests, never named lenders' products, and we never publish rates. How we judge
