What is a commercial business loan?
Businesses are expensive to start and run, therefore they usually require a large amount of capital to cover their expenses. A business loan is a loan that is used to pay for expenses in which a business is unable to pay for itself, such as:
- Purchasing a commercial property
- Expanding operation
- Purchasing/upgrading business equipment and IT software
- Increase working capital
- Purchase inventory
Commercial loans are considered non-coded as they do not fall under the NCCP in Australia as their intended purpose is business.
What is a business expansion loan?
Businesses undergo expansions through different stages of their life. However, many business owners know that, depending on the cash obtained from customers, it can be challenging because it is unpredictable. So, funding new projects becomes difficult when cash inflows are irregular. A business loan will be the perfect way to acquire credit to expand your business ventures. These types of loans require you to have a business plan for expanding your business as lenders need to know how the money will be used, this is best done with your accountant.
Part of expanding your business would be upgrading or purchasing equipment/IT software. An equipment loan would help fund the equipment required for your business. Most often, the loan is securitised against the equipment itself. There are different types of equipment finance:
Working capital loan
Working capital is the available cash (current asset minus current Liabilities) a business has to make day-to-day operational activities. A working capital loan would be tailored to assist businesses to cover their day-to-day operational cost like accounts payable, labour cost or raw material. The loan is not for investments, expansions or long-term asset purchase, but strictly to cover business short-term operations.
Inventory finance is a short-term loan to purchase inventory to sell, or material and components to make a product. Inventory finance can help businesses pay their suppliers quicker than they can sell their inventory to customers. This type of finance is beneficial for businesses that need inventory during periods of high sales, like periods around the holidays.
What is a commercial mortgage?
A commercial mortgage is used predominantly for purposes related to business and investment. The loan is secured by commercial property, such as:
The commercial loan could be used to purchase, refinance or develop a commercial property. Most aspects of a commercial loan are similar to other property secured loans like residential. However, the purpose of the loan must be commercial or business. Interest rates for a commercial mortgage are usually higher than the rates for a residential mortgage.
Small commercial Loans
Small commercial loans are also known as small business loans. These loans are typically under $1m and are not generally subject to annual review by the lender. Small commercial loans can be approved up to 80% LVR on both full doc and low doc basis in Australia.
Large commercial loans
Large commercial loans can get very good interest rates if handled correctly by your mortgage broker. In many cases, we can negotiate very good loan terms from lenders based on economies of scale for the right borrower. Feel free to contact us today.
What are the different types of commercial property loans?
There are various product types for commercial property loans. Different lenders offer different product types for commercial loans. These can include:
- Variable loans
- Fixed interest rate loans
- Line of credit loans
- 80% LVR commercial loans
- 75% LVR commercial loans
- 70% LVR commercial loans
- Private money loans
- Low doc commercial loans
- No doc commercial loans
- Bad credit commercial loans
- Lease doc commercial loans
- Lite doc commercial loans
- full doc commercial loans
- Construction commercial loans
- 30 year commercial loans
- 25 year commercial loans
- 15 year commercial loans
- Working capital loans