COMPLETE AUSTRALIAN COMMERCIAL PROPERTY FINANCE GUIDE
Commercial property finance in Australia: the complete guide to LVR, DSCR, leases and loan structure.
Commercial credit is not one maximum LVR. The result comes from the borrower, purpose, industry, property, lease, valuation, cash flow, evidence and facility terms. This guide turns those moving parts into practical planning ranges and a decision process you can use before signing a contract.
Owner-occupied + investment propertyFull doc + alt doc + lease docPolicy bands, not approval promises
General Australian credit information only. The ranges shown are broad planning guides, not lender quotes, eligibility rules, pre-approvals or guarantees. Actual policy, pricing and assessment methods vary and can change. Legal, tax, valuation and financial advice remain separate.
Commercial finance is a matrix: classify the deal before comparing the rate.
What decides a commercial property loan?
A lender first identifies the real transaction: who is borrowing, what the money will do, which property secures it and how every facility will be repaid. It then tests the accepted value and LVR, the business or lease income, existing debts, credit conduct, evidence quality, property marketability and the exit if the loan is short term.
A warehouse at 75% LVR can be straightforward for one established owner-occupier and unsuitable for another borrower with weak cash flow or a secondary property. A medical practice can qualify under a specialist industry pathway that would not apply to an ordinary retailer. A leased retail investment can be serviceable today but become fragile if the lease expires shortly after settlement. The useful answer is therefore a range plus the conditions that support it.
Who must repay?
Trading history, management, credit, tax position, guarantors, entity structure and the wider statement of position.
What is being funded?
Property, refinance, equity release, goodwill, fit-out, equipment, working capital or a combination.
What can be sold?
Type, location, title, zoning, lease, condition, alternate use, environmental risk and accepted valuation.
What survives stress?
Business cash flow, net rent, sensitised debt service, liquidity, term, covenants and exit strategy.
Commercial finance pathway
Owner-occupied business premises
65%–80%
Primary repayment evidence
Business earnings, borrower support and retained liquidity.
Main policy pressure
Business durability, property marketability and complete funding stack.
Commercial finance pathway
Third-party leased investment
60%–75%
Primary repayment evidence
Net rent, lease, tenant, borrower support and wider debts.
Main policy pressure
WALE, vacancy, incentives, valuation and reletting risk.
Commercial finance pathway
Lease-doc investment
60%–75%; 80% niche
Primary repayment evidence
Executed arm's-length lease, rent credits and net coverage.
Main policy pressure
Tenant independence, rent evidence, property acceptability and vacancy fallback.
Commercial finance pathway
Short-term or private property facility
55%–70%
Primary repayment evidence
Clearly defined and verifiable exit rather than long-term earnings alone.
Main policy pressure
Exit certainty, first mortgage, valuation, cost and refinance risk.
These bands are deliberately broad. A specific lender can sit outside them, and the upper edge generally requires stronger property, location, borrower and evidence—not merely a larger deposit.
The broader market improved through 2025—but commercial finance still turns on the individual asset, lease and business.
System-level market data is useful context. It does not tell you the value, loan size or financeability of a particular warehouse, office, shop, service station, childcare centre or operating property.
Current conditions are more constructive than the 2022–24 adjustment period, but the recovery is uneven.
APRA reported that Australian authorised deposit-taking institutions held $487.6 billion of commercial property exposures at March 2026, up 8.7% over the year. The Reserve Bank reported that fundamentals and valuations improved across most Australian commercial real-estate markets during 2025. Prime office demand supported rents and values, retail conditions improved as vacancy declined, and industrial conditions were supported by warehousing and distribution demand; lower-grade office property and high-vacancy locations remained weaker.
Those findings describe the banking system and broad market segments. They are not a valuation index for one property and do not mean lenders have relaxed every LVR, DSCR, location, lease or industry rule.
What the data can tell you
Commercial property remains a large and actively financed part of the Australian banking system. Broad conditions improved across several major sectors through 2025, supporting transaction and refinancing activity.
What the data cannot tell you
A national figure cannot resolve the property’s accepted value, alternative use, local vacancy, tenant quality, environmental history, borrower cash flow or lender-specific exposure limits.
Market context checked 14 August 2026: APRA March 2026 property-exposure statistics and RBA Financial Stability Review, March 2026.
Owner-occupied, investment, mixed-use and business-acquisition deals follow different assessment approaches.
Owner-occupied premises
The operating business usually carries the repayment case. The lender wants to understand why ownership improves the business, whether the move fits capacity and strategy, and whether cash remains after deposit, duty, fit-out and working capital.
- Use actual and normalised business earnings—not only the latest strong month.
- Separate the property term from shorter-life fit-out and equipment.
- Check whether a simplified owner-occupied pathway excludes the industry, purpose or property.
Commercial investment
The lease and valuation become central, but the borrower still matters. The lender tests tenant strength, remaining term, market rent, incentives, vacancy, outgoings, property specialisation and the borrower's ability to support a gap.
- Model net rent rather than advertised gross yield.
- Use a vacancy and incentive allowance even where the current tenant is strong.
- Do not treat an option period as certain income.
Mixed-use property
Residential and commercial proportions, zoning, access, title and alternate use can move the loan between residential, commercial and specialist policy. One lender can accept a property that another classifies as non-standard.
- Confirm the actual permitted and current use.
- Expect a lower LVR where the commercial use dominates or the configuration is unusual.
- Keep valuation and lender classification aligned before contract dates expire.
Property plus business acquisition
The property is only one use of funds. Goodwill, stock, fit-out, equipment, fees and working capital may need different terms and security. A single long property loan can hide an unsustainable funding mix.
- Build a complete sources-and-uses statement.
- Match repayment term to asset life.
- Test debt service after owner wages, tax, rent replacement and launch costs.
The property offered as security does not decide whether consumer credit law applies
Whether the National Credit Code applies turns on several conditions, including the debtor and the predominant purpose of the credit—not simply the property offered as security. Business-purpose credit can fall outside the Code even when a home supports it, while credit used wholly or predominantly for personal, domestic or household purposes, or to buy, renovate or improve residential investment property, can fall within it. A purpose declaration does not cure an inaccurate purpose. Obtain legal guidance where the use is mixed or uncertain.
Indicative commercial LVRs vary materially between warehouses, retail, offices and specialist property.
The table below is the core planning tool missing from most Australian commercial-finance guides. It shows where a transaction may start—not where a lender must finish.
Use the table as a budget range—not a promise of maximum leverage.
The lower end is a safer starting point where the lease, location, valuation or borrower is not yet confirmed. The upper edge usually belongs to a strong mainstream asset or an explicit niche policy. Property type is only one gate: loan size, location category, vacancy, cash-out, credit and income evidence can pull the available LVR down.
Property or security type
Standard industrial unit or warehouse
65%–75%Up to 80%
What supports the stronger end
Broad tenant appeal, functional access, standard construction and strong metro/major-regional location.
What usually lowers leverage
Specialised fit-out, oversupply, poor access, contamination, large vacancy or secondary location.
Property or security type
Standard retail shop
60%–70%Up to 75%
What supports the stronger end
Strong catchment, adaptable layout, sustainable market rent and a clean lease.
What usually lowers leverage
Short WALE, weak tenant, high incentives, online-disruption exposure, vacancy or single-purpose layout.
Property or security type
Standard office
60%–70%Up to 75%
What supports the stronger end
Quality building, efficient floorplate, parking/transport and diversified tenant demand.
What usually lowers leverage
Strata office can be held near 60%–65%; secondary office, vacancy and high incentives reduce appetite.
Property or security type
Medical or professional suite
65%–80%Higher in selected specialist pathways
What supports the stronger end
Owner-occupied eligible practice, suitable property, proven practitioner income and structured principal reduction.
What usually lowers leverage
Highly specialised fit-out, third-party investment use, weak alternate use or practitioner outside the specialist program.
Property or security type
Mixed residential and commercial
60%–70%Up to 75%
What supports the stronger end
Clear lawful use, standard configuration, strong residential component and broad resale demand.
What usually lowers leverage
Unclear zoning, access conflict, unusual title, dominant specialised use or valuation uncertainty.
Property or security type
Childcare centre
50%–60%Up to 65%
What supports the stronger end
Strong operator, licence, demand, long lease and acceptable alternate use.
What usually lowers leverage
Operator dependence, regulatory risk, specialised improvements and limited replacement-tenant pool.
Property or security type
Boarding house or accommodation asset
50%–60%Up to 65%
What supports the stronger end
Lawful approvals, stable operating history, professional management and diversified income.
What usually lowers leverage
Operating-business risk, fire/compliance issues, short-stay volatility and specialised configuration.
Property or security type
Hotel, motel, service station or other operating property
45%–60%Around 65% only in stronger specialist cases
What supports the stronger end
Experienced operator, sound environmental/operating evidence, stable earnings and strong exit.
What usually lowers leverage
Business-value dependence, environmental exposure, licences, branding, capex and narrow buyer market.
Property or security type
Vacant commercial or industrial land
50%–60%Up to 65%–70% in selected locations/products
What supports the stronger end
Clear zoning, serviced site, credible holding cost and short, verifiable development or sale plan.
What usually lowers leverage
No income, planning risk, land banking, secondary location, large acreage and uncertain exit.
Property or security type
Specialised or single-purpose property
40%–60%Case-by-case
What supports the stronger end
Strong operator, long lease, high borrower equity, alternate-use evidence and conservative valuation.
What usually lowers leverage
Limited alternative use, thin comparable sales, expensive conversion and dependence on one industry or tenant.
Do not add policy benefits together. A medical borrower, strong lease and low loan amount do not automatically produce the highest LVR. Each lender applies its own product eligibility, property caps, loan-size tiers and credit judgement.
Location, vacancy, cash-out, valuation and loan size can move the answer by more than the property label.
| Policy factor | Typical directional effect | Why credit reacts |
|---|---|---|
| Prime metro or strong major-regional location | Can preserve the top of the property-type range | More buyers, tenants, valuers and refinance options. |
| Secondary or thin regional market | Often 5–15 percentage points lower, plus loan cap | Longer sale and lease-up periods increase loss severity. |
| Vacant property or lease under 12 months | Often 5–15 points lower unless business income supports | Income can disappear before the lender can re-let or refinance. |
| Strata office or small specialised suite | Often held near 60%–65% | Small buyer pool, building exposure and limited alternative use. |
| Large cash-out or working-capital release | Commonly tighter above roughly 70%–75% | The lender must verify purpose and is funding value already created rather than a purchase. |
| Strong owner-occupied business and mainstream security | Can support 5–15 points more than a weak investment case | Repayment comes from established earnings and the property remains readily marketable. |
| High loan amount | Higher LVR tier may fall as debt rises | Concentration and exit risk grow even when the property is prime. |
| Low valuation or cap-rate expansion | Effective LVR rises immediately | The lender uses its accepted value, not the contract price or online estimate. |
Liquidity beats postcode prestige
Credit asks how many genuine buyers and tenants exist at the lender’s exit price—not whether the suburb name sounds premium.
A long lease is not automatically strong
Tenant quality, break rights, incentives, over-rent, options and landlord obligations can outweigh the headline term.
The lower accepted value controls
A 10% valuation shortfall can add far more cash than a small rate difference. Model the purchase at more than one value before committing.
Cash-out is a separate risk decision
Purpose, amount, evidence and resulting leverage can narrow policy even when an existing property has strong equity.
A prime asset cannot repair weak repayment capacity
ATO arrears, inconsistent earnings, short trading history, adverse credit or inadequate liquidity can lower leverage or change lender tier.
Maximum debt falls as concentration rises
Many policies allow a higher percentage on a smaller loan and require more equity as total exposure grows.
Calculate deposit from the accepted value—not the price alone
If the contract is $2 million, the loan request is $1.4 million and the lender values the property at $1.8 million, the effective LVR is 77.8%, not 70%. At a 70% maximum LVR, the loan would be capped at $1.26 million, so the cash contribution rises from $600,000 to $740,000 before duty and other transaction costs.
Commercial serviceability ranges from a bare policy floor to a genuinely resilient repayment margin.
DSCR asks whether accepted income covers the lender’s version of annual debt service.
A simple property DSCR is net operating income divided by annual repayments. An owner-occupied transaction may instead use business cash flow after adjustments, owner remuneration, tax and all existing commitments. The numerator and denominator change by lender, so a quoted ratio is meaningless unless you know what has been included.
| Policy item | Indicative range or treatment | Correct interpretation |
|---|---|---|
| Policy DSCR floor | About 1.00–1.20× can appear in selected products | This is the lender’s minimum calculation—not a safe operating target. |
| Robust mainstream planning | About 1.20–1.50× | Provides more room for rate, vacancy, expense and earnings changes. |
| Stronger pricing or premium tier | About 1.50–1.75× or more in some policies | A stronger ratio can improve pricing or policy tier rather than merely produce approval. |
| Interest-rate stress | Product rate plus about 2% appears in some specialist policies | Other lenders use floors, sensitised P&I or different buffers. |
| Third-party commercial rent | Roughly 70%–100% of rent, usually excluding GST/outgoings | Some models shade gross rent; lease-doc can use net rent directly against the proposed facility. |
| Related-party rent | Usually limited to supportable market rent | Credit avoids circular income created only by the borrower’s own entity. |
| Interest-only debt service | Actual IO may be used by some products; others test future P&I | The same deal can therefore show materially different DSCR across lenders. |
| Owner-occupied business earnings | Normalised EBITDA/cash flow after realistic owner remuneration and existing debt | Add-backs, one-offs, tax and working-capital movements need evidence. |
Property investment calculation
Start with sustainable net rent. Deduct non-recoverable outgoings, vacancy, incentives, management and realistic capital expenditure. Then test the proposed and retained debts at the lender’s assessment method.
Owner-occupied calculation
Normalise the trading business, identify recurring earnings, owner remuneration, existing debt and working-capital needs, then test whether the new property debt still works through an ordinary weaker year.
The ratio is only as strong as the cash flow underneath it.
Two businesses can report the same EBITDA and still carry very different repayment risk. A lender looks at how the profit is earned, how quickly it becomes cash and what must be funded before the next dollar arrives.
Recurring, contracted or project-based?
Repeat fees, diversified rent or long contracts can be more predictable than one-off projects, volatile room sales or revenue dependent on a single customer.
Profit is not the same as available cash
Debtors, work in progress, stock, supplier terms and delayed claims can trap cash even when the profit-and-loss statement looks strong.
One tenant, customer, contract or practitioner
The loss of one relationship can matter more than the historic average. The lender may test how replaceable that income really is.
The property deposit cannot consume the operating buffer
Payroll, GST, stock, subcontractors, supplier deposits and seasonal needs continue after settlement and can compete with loan repayments.
Approvals can be part of the income stream
Childcare, pharmacy, care, SDA and other regulated activities depend on approvals, registration or compliance that can affect the ability to keep trading.
Who can keep the business operating?
Owner dependence, practitioner accreditation, partner departures, franchisor support and succession can change the durability of otherwise strong earnings.
DSCR is the output; income quality is the reason behind it.
A lender may accept the same accounting profit differently after considering customer concentration, cash conversion, working capital, operator capability, regulatory dependence and the cost of keeping the property fit for its purpose.
A 1.00× policy floor is not a business buffer. A transaction that only just meets a lender calculation can still be vulnerable to one tenant-free month, an interest-rate rise, a repair, a BAS payment or a softer trading period.
Full doc, alt doc, lease doc and short-term finance are different ways of proving repayment capacity—not labels for the same loan.
Evidence labels change how income is verified—not whether normal purpose, credit, conduct and security checks still apply.
Evidence approach
Full doc
65%–80% on mainstream property15–30 years
Common evidence
Two years of business and personal tax returns/financial statements are common, plus current BAS or management accounts where needed.
Main control
Best where historic earnings are stable and current data reconciles.
Evidence approach
Contemporary or simplified full doc
Selected owner-occupied pathways can reach the mainstream upper rangeLong-term property terms may be available
Common evidence
Recent BAS, ATO reports, business statements and a digital or declared-income process can be used in selected owner-occupied small-business pathways.
Main control
The borrower, purpose, industry, property, loan size and tax position must all fit the particular streamlined process.
Evidence approach
Alt doc
60%–75%; 80% niche15–30 years
Common evidence
Income declaration supported by roughly 6–12 months BAS, business statements or an accountant letter.
Main control
Evidence must be contemporary, consistent and credible; it is not no verification.
Evidence approach
Lease doc
60%–75%; 80% niche15–30 years
Common evidence
Current executed third-party lease, rent statement/credits and enough net rent to cover the proposed loan under the product test.
Main control
Arm’s-length tenant, acceptable property and vacancy fallback are critical.
Evidence approach
Low/no-income or private
55%–70% typical6–24 months
Common evidence
A complete statement of position, first-mortgage security and a specific sale, refinance or other exit; income documents may be reduced.
Main control
Cost and maturity risk are high. “No income documents” does not mean no credit assessment.
Evidence approach
SMSF commercial
60%–75%; 80% niche15–30 years
Common evidence
Fund documents, contribution history, liquidity, lease and property evidence, plus confirmation that the current legal pathway is available.
Main control
Post-10 August 2026 business-real-property rules and fund cash flow apply.
Every document must tell the same story
Declared income, BAS, bank credits, ATO position, financial statements and debt schedules should reconcile. Unexplained gaps create delay or conservative assessment.
Old financials need a current bridge
Interim accounts, BAS, ATO reports and business statements show whether the most recent completed year still represents today’s business.
Numbers need a business explanation
Customer concentration, seasonality, supplier terms, key-person risk, working-capital cycle and a recent expansion can explain movements that a spreadsheet alone cannot.
Streamlined evidence is narrower than general commercial policy
Some owner-occupied small-business pathways can use recent BAS, ATO and bank data instead of two completed years of full accounts. They can still exclude investment, development, SMSF, land banking, rural or specialised property, large ATO arrears and other higher-risk purposes. A shorter document list does not remove the need to prove a credible business, property and repayment position.
The lease is part of the security because it drives both serviceability and value.
| Lease position | Broad lender reaction | What still needs review |
|---|---|---|
| More than 5 years remaining | Usually the strongest starting position | Still test tenant covenant, options, incentives, rent above market and make-good. |
| 3–5 years remaining | Generally mainstream where tenant and property are sound | Valuer and lender may model the next review or expiry during the loan term. |
| 1–3 years remaining | More referral risk; LVR and term can tighten | Renewal strategy, tenant communication, market rent and borrower support become important. |
| Less than 12 months | Often treated close to vacancy unless renewal is credible | Expect lower leverage, business/full-doc servicing or cash reserves. |
| Vacant possession | Owner-occupier or full borrower support must carry the loan | Valuation may use vacant assumptions and include lease-up costs. |
| Related-party lease | Usually assessed at supportable market rent | The operating business must still service the property debt; an inflated internal rent adds no real cash. |
| Lease-doc third-party tenant | Can simplify income evidence | Needs executed arm’s-length lease, rent history, acceptable tenant and property, and often a net-rent coverage test. |
Who is actually paying the rent?
Review legal entity, trading strength, guarantees, industry exposure, concentration and whether the tenant can be replaced—not only the brand on the sign.
Gross rent can overstate usable income
Remove GST and non-recoverable outgoings, then allow for vacancy, incentives, management, repairs and capital works.
Breaks and obligations can change value
Assignment, demolition, relocation, early termination, market reviews, make-good and incentive repayment clauses can undermine a long headline term.
WALE does not replace lease review
Weighted average lease expiry is useful for multi-tenant property, but two assets with the same WALE can have different risk. A diversified rent roll with staggered expiries can be stronger than one large tenant with an option it is not obliged to exercise.
Commercial valuation converts rent, risk and marketability into the value that controls the LVR.
Capitalisation approach
The valuer capitalises sustainable net income at a market yield. Market rent, vacancy, incentives, outgoings and lease risk can matter more than the contract price.
Direct comparison
Recent comparable sales are adjusted for size, location, lease, condition and use. Thin markets or unusual property increase judgement and lender caution.
Summation or replacement
Land and improvements are considered separately, but construction cost does not guarantee equivalent market value—especially for specialised fit-out.
| Issue | Why the lender cares | Practical evidence | Possible outcome |
|---|---|---|---|
| Zoning and lawful use | Current operations or lease may not be permitted. | Planning certificate, permits, occupancy and use history. | Referral, lower LVR or unacceptable security. |
| Environmental exposure | Contamination can create clean-up cost and sale risk. | Environmental reports, prior use, audits and warranties. | Specialist valuation, indemnity, lower LVR or decline. |
| Strata/building risk | Levies, defects, insurance and concentration affect saleability. | Minutes, financials, insurance, defects and special levies. | Lower LVR or building exposure cap. |
| Specialised fit-out | Cost may have little value to a replacement owner. | Alternate-use plan, removal cost and market demand. | Value on vacant/alternative basis and more equity. |
| Access, parking and title | Operational utility and buyer pool can be impaired. | Title, easements, access rights, parking allocation and survey. | Valuation discount or legal condition. |
| Over-rent or incentives | Contract rent may not survive renewal. | Lease, incentive deed, market evidence and rent review. | Valuation based on lower market rent. |
Industry risk can change both the valuation method and the exit assumptions.
The valuer and lender are not only asking what the improvements cost. They are asking what income survives, whether the use can continue and what another buyer or tenant could realistically do with the site.
Property and business can be intertwined
Hotels, motels, service stations and some care assets may require trading performance to be separated from land, buildings, goodwill, stock and management value.
Past use can create future cost
Fuel storage, chemicals, heavy industrial use and contamination can affect due diligence, insurance, remediation cost, alternative use and saleability.
Approval can support income without guaranteeing value
Childcare, pharmacy, SDA and aged-care-related uses can depend on provider, service, dwelling or location approvals that may not transfer automatically.
Useful to the operator does not always mean valuable to the market
Medical rooms, commercial kitchens, fuel infrastructure, childcare improvements and accessibility works can have high replacement cost but limited value to another user.
Forecast income may not equal stabilised value
New self-storage, hospitality, childcare and care-related assets can need evidence that occupancy, pricing and operating costs are sustainable rather than merely projected.
The fallback buyer pool matters
A standard warehouse can have many potential users. A highly specialised building may need expensive conversion, creating a lower vacant-possession or alternate-use value.
A valuation is not due diligence. It is prepared for a defined lender purpose and may not identify building defects, legal problems, contamination, lease enforceability or commercial suitability. Separate legal, building, environmental and tax advice can still be essential.
The property is only half the credit story: the industry determines how durable the income and exit can be.
This section stays deliberately general. It explains the recurring questions that change finance across industries while leaving room for each sector to have its own detailed lending guidance page later.
Why does the lender look at the industry when there is property security?
For an owner-occupied property, the business normally makes the repayments. For an investment, the tenant and industry influence rent durability, lease risk and the likelihood that another operator can take over. The lender therefore looks beyond the building label to the operator, approvals, revenue model, working-capital cycle, specialised improvements and fallback use.
The point is not to declare one industry “good” or “bad”. It is to identify which facts must be proven so the property, income and exit are assessed on the right basis.
Who keeps the income alive?
Experience, ownership, key people, tenant covenant, succession and the ability to replace the operator can matter as much as the lease term.
Can the use legally and practically continue?
Provider approvals, registrations, licences, design standards, environmental duties and franchise or pharmacy rules can affect operating continuity.
Where does cash actually come from?
Rent, recurring professional fees, room income, government-supported payments, fuel/convenience sales or project margins have different volatility and evidence.
What must be funded after settlement?
Stock, payroll, supplier terms, fit-out, maintenance, refurbishments and regulatory upgrades can consume cash that otherwise supports the property debt.
How many alternative buyers or tenants exist?
Single-purpose design, expensive conversion, environmental exposure and highly tailored fit-out can reduce valuation and lender leverage.
What happens if the first plan fails?
The lender considers re-leasing, replacement operator demand, property sale, business sale, refinance and the time and cost required to execute the fallback.
What lenders commonly investigate by industry or property use
| Industry or use | Where repayment usually starts | What can weaken income, value or exit | What the borrower should prepare |
|---|---|---|---|
| Industrial, manufacturing and wholesale | Trading cash flow for an owner-occupier; net rent for an investment. | Customer or supplier concentration, input costs, stock and debtors, equipment obsolescence, heavy-use or environmental issues. | Financials and BAS, debtor/stock ageing, major contracts, capex plan, property-use details and environmental information. |
| Office and professional services | Recurring fees and partner/principal earnings; arm’s-length rent for an investment. | Work-in-progress and debtor lock-up, key-person or partner departure, client concentration, fit-out and weaker secondary-office markets. | WIP/debtor ageing, ownership and partner profile, recurring-client mix, distributions, lease and fit-out budget. |
| Medical, dental and veterinary practices | Practice earnings and practitioner income, supported by the property. | Practitioner dependence, accreditation, goodwill, fit-out and equipment with shorter lives than the property, and limited alternate use. | Practitioner experience, practice financials, patient/referral profile, fit-out/equipment schedule, registrations and complete funding plan. |
| Childcare | Operator earnings or third-party lease income. | Provider/service approvals, CCS dependence, occupancy, staffing, compliance history, operator concentration and specialised premises. | Approvals, occupancy and fee data, staffing, compliance record, operator financials, lease and property plans. |
| Service stations | Lease income or operating cash flow from fuel and convenience retail. | Underground fuel systems, contamination and remediation, tank age, equipment ownership, access/traffic, lease obligations and alternative use. | Environmental and site history, tank/testing records, lease and indemnities, equipment ownership, trading or rent evidence and insurance. |
| Hotels, motels and accommodation | Property-backed trading earnings; sometimes third-party lease income. | Occupancy and room-rate volatility, seasonality, management, licences, capex and confusion between property value and business/goodwill value. | Trading history, occupancy and room-rate data, management arrangements, capex, licences and separate property/business valuation evidence. |
| Pharmacy and franchise retail | Operating earnings or rent from an approved/franchised operator. | PBS or location approval, franchise agreement, supplier and stock terms, lease/franchise misalignment, brand dependence and required capital expenditure. | Approvals, disclosure/franchise documents, lease, stock and working-capital position, historical trading and transfer/renewal conditions. |
| Self-storage | Operating cash flow from the rent roll and sustainable occupancy. | Ramp-up risk, forecast occupancy, unit mix, location, management systems, capex and alternative use of the site. | Rent roll, occupancy history, pricing and unit mix, operating costs, marketing and capex plan, and a valuation by a valuer experienced in the sector. |
| SDA and aged-care-related property Different regulatory regimes | Registered provider or tenant income, occupancy and property support. | Provider registration, SDA design/enrolment, participant or resident demand, staffing/quality obligations, specialised use and regulatory change. | Provider registration, dwelling/home approvals, lease or service agreements, occupancy/demand evidence, compliance record and property design. |
| Construction, home building and development | Contracted project cash flow, retained earnings and/or completed-asset sale or refinance. | Work in progress, margin erosion, variations, project concentration, cost-to-complete, guarantees, presales and supplier/subcontractor exposure. | Order book, WIP and margin schedule, project cash flow, cost-to-complete, guarantees, presales, tax position and contingency. |
Primary repayment and fallback are not the same thing
Business cash flow first
The operating business should repay the loan. Property sale or refinance is a secondary fallback, not a substitute for viable trading.
Net rent and tenant first
The lender then considers re-leasing, incentives, vacancy costs and saleability if the tenant leaves.
Business and real estate can be linked
Hotels, service stations and some care assets may need property and trading values separated before the debt is structured.
The exit can be the primary repayment plan
Sale, refinance or settlement of pre-sales must be specific, timed, costed and credible rather than an optimistic backup.
This guide is the national overview layer.
It deliberately stops at the enduring finance questions. Dedicated industry guidance can later cover sector economics, regulatory pathways, specialised documents, valuation practice, common transaction structures and worked examples without overcrowding this page.
Service station financeChildcare property financeHotel & motel financeMedical practice propertyPharmacy financeSelf-storage financeSDA & care propertyFranchise premisesConstruction & development
The best loan structure matches the asset life, cash-flow cycle and exit—not merely the lowest first-year payment.
| Structure | Indicative range | Why it can fit | Control or trade-off |
|---|---|---|---|
| Long-term P&I | 15–30 years | Debt reduction and predictable maturity. | Some bank/market facilities use shorter terms even when amortisation is longer. |
| Interest only | 1–5 years common | Cash flow during investment hold, fit-out or transition. | Future P&I, refinance and maturity must work; IO can carry a pricing loading. |
| Short-term/private | 6–24 months common | Acquisition, bridge, cash-out or temporary evidence/lease issue. | High cost and maturity risk; exit must be specific and verifiable. |
| Fixed or hedged component | From short pricing periods to multi-year structures | Budget certainty and rate-risk management. | Break/economic costs and reduced flexibility. |
| Variable/revolving component | Ongoing subject to facility terms | Working capital, redraw or staged needs. | Limit discipline, review, line fees and variable-rate exposure. |
| Annual-review facility | Usually yearly reporting | Relationship lending with ongoing monitoring. | Updated financials, covenants, lease and sometimes valuation. |
| No-review/set-and-forget product | Available in selected specialist products | Lower operational reporting and fewer periodic revaluations. | Usually different pricing, product conditions and early-repayment terms. |
Common covenant tests
- LVR against an accepted or updated value.
- DSCR or ICR using actual or sensitised debt cost.
- Financial reporting, tax compliance and insurance.
- Lease, occupancy, tenant arrears and material-change notices.
Questions before choosing “no annual review”
- Is the pricing and fee structure still competitive over the intended hold?
- Do early repayment or deferred facility fees reduce flexibility?
- Can the borrower redraw, split, refinance or release security easily?
- Do fewer reporting obligations justify any product trade-off?
A covenant is an early-warning rule—not legal decoration.
Commercial loan documents can require the borrower to maintain financial, property, lease and reporting conditions throughout the term. A breach can trigger review even when scheduled repayments are current.
| Monitoring item | What can trigger attention | What the borrower should manage |
|---|---|---|
| DSCR, ICR or fixed-charge cover | Income weakens, expenses rise or the lender's tested debt cost increases. | Track the lender definition, not only management EBITDA; keep a realistic buffer. |
| LVR | Value falls, cash-out increases debt or the property/lease becomes less marketable. | Understand revaluation rights and how quickly debt could be reduced if value softens. |
| Leverage or gearing | Business debt rises, retained earnings fall or an acquisition adds commitments. | Model the whole group, including guarantees, equipment, overdrafts and related entities. |
| Reporting and tax compliance | Financials, BAS, tax returns, ATO evidence or certificates arrive late or show deterioration. | Know the delivery dates, accounting standard and information the lender can request. |
| Distributions and cash leakage | Dividends, partner drawings, related-party loans or asset sales reduce support. | Check restrictions before moving cash out of the borrower or guarantor group. |
| Lease, occupancy and tenant events | Lease expiry, arrears, break notice, vacancy, major incentive or tenant failure. | Report material changes early and keep a documented renewal or reletting plan. |
| Ownership, management and key people | Sale of control, partner departure, operator change, loss of accreditation or succession event. | Check consent requirements and maintain a workable continuity plan. |
| Insurance, environmental and regulatory compliance | Coverage lapses, contamination, licence/registration problems or an adverse notice. | Keep current evidence, notify material events and budget for remediation or compliance work. |
Compare the complete facility—not rate alone
Interest rate, establishment fee, annual or monthly charges, valuation, lender legal fees, fixed-rate economics, review conditions, covenants, redraw, additional repayment rights, security release and early termination can change the total outcome.
For a refinance-specific comparison, read the Commercial Property Refinance guide.
Property, fit-out, equipment and working capital should be financed as one plan—but not always one loan.
A commercial purchase can require several facilities even when there is only one settlement.
Buying premises may also trigger fit-out, equipment, stock, GST timing, bank guarantees and working-capital needs. Funding everything over the property term can create excessive long-run interest; funding everything short term can crush cash flow. Build the sources and uses first, then choose the facility mix.
Land and building
Usually the longest term because the security has a long economic life. Test accepted value, LVR, legal structure and whether the property is owner-occupied or leased.
Premises-specific improvements
Can sit within property, business or equipment finance depending on ownership, value, supplier and payment stages. Avoid 30-year debt for short-life works without a reason.
Vehicles, machinery and movable assets
Asset finance can preserve property equity and match repayments to useful life. Supplier, asset age, PPSR and settlement method matter.
Cash to operate after settlement
A deposit that empties the business can create failure after approval. Retain payroll, inventory, tax, seasonality and vacancy buffers.
Practice or business acquisition
Usually relies more on earnings, industry and management than property value and often has a shorter term than the property loan.
Rent, performance or supplier obligations
A bank guarantee can replace a cash bond but uses a facility limit or security and must be included in the complete exposure.
Cash-flow cycles, suppliers, customer concentration, equipment and growth plans belong in the same conversation as the property. A building purchase that ignores the operating business can be technically secured but commercially underfunded.
The strongest credit approval can still be a poor transaction if GST, duty, fit-out or liquidity is missing.
| Cost or buffer | What to model |
|---|---|
| Deposit and valuation gap | Required equity is based on the accepted value and maximum LVR, not simply the price. |
| Transfer duty, registration and local charges | State/territory and local-government costs vary by property and jurisdiction. |
| GST treatment and settlement timing | A transaction may be taxable, GST-free as a going concern or subject to another treatment. Confirm contract wording and cash timing with a tax adviser and solicitor. |
| Valuation and due diligence | Commercial valuation, building, environmental, fire, strata and lease reviews can all be separate costs. |
| Lender and legal fees | Application, establishment, line, lender legal, documentation, settlement, review and early-repayment charges vary widely. |
| Fit-out and make-good | Landlord contributions and incentives do not remove the need to fund timing gaps, overruns and future make-good. |
| Working-capital buffer | Payroll, stock, tax, supplier deposits and ramp-up continue after settlement. |
| Vacancy and leasing cost | Allow for incentives, agent fees, legal work, fit-out contribution, outgoings and rent-free periods. |
Run a lower-value scenario
Calculate cash required if the lender value is 5% and 10% below the contract price. That shows whether the deal can still settle without stripping the business of operating cash.
Separate tax advice from loan approval
The lender can approve finance without confirming GST credits, going-concern treatment, duty, land tax, deductions or ownership consequences. These must be resolved before the contract becomes unconditional.
The legal borrowing pathway now comes before lender comparison.
New SMSF borrowing for real property changed on 10 August 2026.
Schedule 5 of the Treasury Laws Amendment (Tax Reform No. 1) Act 2026 added a business-real-property requirement for new real-property LRBAs. It also preserves specified borrowing arrangements entered into before commencement, refinances of earlier borrowings and asset acquisitions under arrangements entered into before commencement. The legal pathway must be established before the finance pathway.
| Issue | Current high-level position or range | Practical control |
|---|---|---|
| New real-property LRBA from 10 August 2026 | The acquired real property must satisfy the business-real-property requirement. | Confirm the legal test before contract; the lender does not give the legal opinion. |
| Pre-commencement borrowing arrangement | Transitional protection can continue for an arrangement entered into before commencement. | Retain complete dated evidence of the original arrangement and asset acquisition. |
| Refinance of protected earlier borrowing | The Act preserves specified refinancing of earlier arrangements. | The new lender still applies current credit, property, fund and documentation policy. |
| Commercial SMSF LVR | About 60%–75% is a useful planning band; 80% appears in selected policies. | Property type, location, lease, contributions, liquidity and loan size control the actual result. |
| Liquidity | Some products require roughly 3–6 months of fund debt repayments, especially for vacancy or short lease; others have different or no stated residual test. | Model liquidity even where policy does not mandate it. |
| Interest only | Commonly 1–5 years where available. | The fund must still meet sensitised servicing, future P&I and retirement/exit considerations. |
A clean commercial approval is usually prepared before the lender starts its full assessment.
Classify the transaction
Confirm borrower, purpose, purchaser, property use, lease status, total costs and contract dates.
Build sources and uses
Include property, GST timing, duty, fit-out, equipment, fees, guarantees and working capital.
Work out the income the lender can use
Reconcile financials, BAS, bank conduct, ATO position, rent, outgoings, working capital and existing debts.
Set realistic finance assumptions
Choose a realistic LVR, DSCR, term and evidence approach before comparing lender options.
Pre-check property and lease
Identify title, zoning, environmental, strata, valuation, tenant and WALE risks early.
Explain the transaction clearly
Show the purpose, business, industry, risks, safeguards, structure, liquidity and fallback in plain language.
Order valuation and answer lender questions
Keep the property, lease, income and source-of-funds information consistent and update the plan if the accepted value changes.
Control documents and settlement
Coordinate borrower, guarantor, lender legal, insurance, conditions, funds and ongoing review obligations.
Credit-ready document groups
Identity, entities and guarantees
Application, ID, company/trust/partnership documents, ownership chart, guarantor position, credit explanation and complete assets/liabilities.
Financial and tax evidence
Two-year or alternative evidence pack, current BAS/management accounts, ATO reports, business statements, debt schedules and commentary on material movements.
Contract, lease and security
Contract or refinance statements, title/zoning, leases, rent ledger, outgoings, incentives, insurance, plans, approvals, strata and specialist reports.
Write the credit story before lodging
A strong submission says what is being funded, why now, how the business or tenant generates cash, what can go wrong, how the structure contains that risk and what documents prove each statement. Uploading a folder without that logic invites repeated questions.
Twelve examples show why changing one fact can move the contribution, evidence, term or lender approach.
01
Owner-occupied warehouse at 75% LVR
Position
Established wholesaler buying a standard metro warehouse; strong two-year earnings but most cash will fund deposit and duty.
Why the outcome can differ
The security is mainstream and leverage may fit, but the business can become undercapitalised after settlement.
Better preparation or structure
Fund the property separately, retain working capital, stress a lower valuation and document why ownership improves operations.
02
Retail investment with 18 months left on the lease
Position
Investor requests 70% LVR because current rent produces a strong yield.
Why the outcome can differ
Short WALE, incentives and renewal uncertainty can lower value, rent recognition and lender appetite.
Better preparation or structure
Obtain tenant/lease evidence, model vacancy and incentives, and budget at a lower LVR or negotiate a renewal before settlement.
03
Medical practice buying premises and fit-out
Position
Eligible practitioner wants property, goodwill and fit-out funded together.
Why the outcome can differ
A specialist practice pathway can support higher property leverage, but goodwill and fit-out have shorter economic lives and separate terms.
Better preparation or structure
Use the specialist industry lane and split property, goodwill and fit-out rather than hiding all uses in one 30-year debt.
04
Warehouse investment using lease doc
Position
Independent tenant has paid rent for 12 months under a long executed lease.
Why the outcome can differ
Lease-doc can reduce reliance on borrower financials, but property, tenant, net-rent coverage and arm’s-length status still control.
Better preparation or structure
Provide lease, rent ledger/credits, outgoings and vacancy buffer; keep a full-doc fallback if the tenant or property fails lease-doc rules.
05
Vacant secondary office with refurbishment plan
Position
Buyer expects to lease the property within six months and requests 70% LVR.
Why the outcome can differ
Vacancy, office market risk, fit-out cost and uncertain market rent can push the value and LVR down.
Better preparation or structure
Use conservative vacant value, fund lease-up and incentives, retain interest buffer and consider lower leverage or a staged/short-term facility.
06
Alt-doc self-employed purchase
Position
Business has strong current BAS and bank credits but latest tax returns understate recent growth.
Why the outcome can differ
A contemporary alt-doc lane can fit, but declared income, BAS, bank statements and ATO position must reconcile.
Better preparation or structure
Prepare 6–12 months evidence and an accountant-supported explanation; compare the cost and flexibility with waiting for full-doc evidence.
07
Refinance and $600,000 cash-out for expansion
Position
Property has strong equity and the business wants working capital and equipment.
Why the outcome can differ
Large cash-out can tighten LVR and evidence; a long property loan may be unsuitable for all uses.
Better preparation or structure
Document sources/uses, separate equipment and revolving needs, show repayment benefit and keep total leverage within a refinanceable band.
08
SMSF buys business premises after 10 August 2026
Position
Fund proposes a new LRBA and related-party lease to the members’ trading business.
Why the outcome can differ
The property must satisfy the business-real-property legal requirement and the fund must meet current lender cash-flow, lease and liquidity policy.
Better preparation or structure
Obtain legal/tax advice before contract, use supportable market rent, prepare fund/contribution evidence and compare commercial SMSF lenders.
09
Service-station investment with a strong lease but incomplete environmental records
Position
Investor is buying a well-located service station leased to an established operator, but site and underground-fuel-system records are incomplete.
Why the outcome can differ
Strong rent and tenant quality may not offset contamination, tank, remediation and lease-responsibility uncertainty. The valuation and acceptable LVR can change materially.
Better preparation or structure
Complete environmental and site-history due diligence, verify tank/testing records and equipment ownership, review lease indemnities and model the property on a conservative alternative-use basis.
10
Childcare centre with high occupancy and one dominant operator
Position
Investor is buying a purpose-built centre with a long lease, high reported occupancy and one operator across several related sites.
Why the outcome can differ
The lender may look beyond the lease to provider and service approvals, operator financial strength, staffing, compliance, occupancy sustainability and the ability to replace the operator.
Better preparation or structure
Verify approvals and compliance, obtain operator financials and occupancy/fee evidence, review the lease and test demand from alternative approved operators.
11
Hotel acquisition where the property and business are sold together
Position
Experienced operator is buying the freehold, accommodation business, goodwill, inventory and working capital under one headline price.
Why the outcome can differ
The property, trading business and other assets have different values, evidence and useful lives. Seasonality, occupancy, room rates, management and refurbishment can change serviceability.
Better preparation or structure
Obtain separate property and business valuation evidence, provide trading history and occupancy/room-rate data, identify capex and keep enough working capital after settlement.
12
Professional-services firm buying an office while cash is tied up in WIP and debtors
Position
Profitable accounting, legal or consulting partnership wants to buy its premises but carries substantial work in progress, debtors and regular partner distributions.
Why the outcome can differ
Reported profit can be strong while cash conversion, client concentration, partner changes and drawings reduce the money available for property repayments.
Better preparation or structure
Provide WIP and debtor ageing, recurring-revenue and client concentration data, partner/ownership arrangements, distribution policy and a cash-flow forecast that preserves working capital.
The best commercial decision is sometimes to change the structure before changing the lender.
Pause before committing when…
- The deal only settles at the highest advertised LVR and the contract leaves no valuation buffer.
- Business cash is consumed by deposit while fit-out, equipment, tax and working capital remain unfunded.
- The lease expires soon, contains unusual break rights or the current rent is materially above market.
- The property has specialised use, environmental history, title/zoning uncertainty or a thin resale market.
- The DSCR works only at today’s actual payment and fails under the lender’s assessment method.
- A short-term loan has an “expected refinance” rather than a verified, timed and affordable exit.
- The purchaser/entity was chosen before legal and tax advice.
- The transaction depends on one lender’s niche without a fallback.
Compare lenders across…
- Property type, location, value method and maximum exposure.
- Full-doc, alt-doc, lease-doc or short-term evidence method.
- Accepted rent, business earnings, assessment rate and DSCR formula.
- Loan term, IO treatment, amortisation and maturity.
- Cash-out, purpose evidence and security structure.
- Annual review, covenants, reporting and revaluation rights.
- Rate, establishment, legal, valuation, line and early-repayment costs.
- Redraw, extra repayments, splits, security release and future refinance flexibility.
Commercial property finance questions answered with general planning ranges.
How much deposit is normally needed for commercial property?
A broad first-pass budget is often 20%–40% plus costs, because mainstream LVRs commonly sit around 60%–80%. The actual deposit is based on the lower accepted value and the lender’s property, location, loan-size, lease, borrower and purpose rules.
Can I borrow 80% for a warehouse?
Potentially. Standard industrial and warehouse property can sit at the stronger end of commercial policy, especially for an established owner-occupier in a liquid location. Investment, secondary location, vacancy, large loan size or specialised use can reduce the available LVR.
What LVR is common for a retail shop?
About 60%–70% is a useful broad planning range, with selected strong cases reaching around 75%. Lease term, tenant strength, market rent, incentives, vacancy, location and the adaptability of the shop are decisive.
Why are strata offices often limited near 60%–65%?
Some policies explicitly cap strata offices because the buyer and tenant pool can be narrower and exposure to one building matters. Quality, size, parking, location, building condition and market demand can improve or worsen the result.
Can medical and professional borrowers have specialist finance options?
Potentially. Selected healthcare and professional-services pathways may allow stronger leverage, longer property terms or different security treatment than ordinary commercial policy. Eligibility depends on occupation, experience, owner-occupied use, financial strength, property suitability and how the property, goodwill, fit-out, equipment and working capital are separated. It is not a general commercial maximum.
What DSCR do commercial lenders require?
Some policy floors can sit around 1.00× to 1.20×, while a robust planning range is often 1.20×–1.50× and some stronger pricing tiers require around 1.50×–1.75×. The answer depends on how income and debt service are calculated.
Is a DSCR of 1.0 safe?
It means accepted income only equals the calculated debt service. It leaves no margin for vacancy, repairs, rate changes, weaker trading, tax or other shocks, so it should not be treated as a resilient operating target.
What is lease-doc commercial lending?
It is a pathway where the executed arm’s-length lease and verified rent can be the main income evidence for the proposed property loan. The tenant, rent history, net coverage, lease terms, property and vacancy fallback still need to fit policy.
Can lease doc work with a related-party tenant?
Usually not in the same way as an independent third-party lease. A lender can treat related-party rent at supportable market levels and assess the operating business because rent paid by one related entity is income to another within the same economic group.
Can I get a commercial loan without two years of financials?
Potentially through contemporary full-doc, alt-doc, lease-doc, simplified owner-occupied or short-term/private pathways. These use other evidence such as BAS, bank statements, accountant declarations, rent history or a verified exit, and usually involve different policy or pricing.
How long are commercial property loan terms?
Long-term P&I facilities commonly range from about 15 to 30 years. Some market or relationship facilities use shorter legal terms, while short-term private loans are commonly around 6–24 months.
How long can interest-only run?
One to five years is common in long-term commercial products. Longer periods can exist in niches. The lender may still assess future P&I or require a stronger DSCR, and the borrower needs a plan for expiry.
Do all commercial loans have annual reviews?
No. Annual review and covenant reporting are common in relationship or bank facilities, but selected specialist products are structured without annual financial reviews or periodic revaluation. The trade-off can be different pricing, fees and product conditions.
What covenants can a commercial lender impose?
Common covenants include LVR, DSCR or ICR, financial-reporting, tax-compliance, insurance and lease/occupancy conditions. The actual loan document controls, so legal review matters before settlement.
How does a commercial valuation work?
Valuers commonly use income capitalisation, market comparison and sometimes a cost/summation approach. Sustainable net rent, market yield, lease risk, vacancy, incentives, location, condition and alternate use can materially change value.
Can I use a home as security for a business-purpose loan?
Potentially. The security does not by itself determine the legal credit regime or whether the transaction is suitable. The home is exposed if the business cannot repay, and purpose, regulation, serviceability and structure require careful review.
Can commercial equity be released for working capital?
Potentially. Cash-out purpose, amount, evidence, valuation, resulting LVR, business need and repayment benefit are assessed. Larger cash-out at higher LVR is commonly more restricted than a purchase or straight refinance.
Should equipment be financed inside the property loan?
Not automatically. Equipment normally has a shorter useful life and can be financed against the asset. A separate facility can preserve property equity and match repayments to the asset, while some fixed fit-out may sensibly sit with property or business finance.
What happens if the commercial property is vacant?
The lender can lower LVR, use a vacant valuation, require full borrower serviceability, add a rate or policy loading, demand interest reserves or move the deal to another product. Lease-up time, incentives and fit-out should be modelled.
Can an SMSF still borrow for commercial property?
Potentially. From 10 August 2026, a new real-property LRBA must meet the business-real-property requirement. Specified earlier borrowing arrangements, qualifying refinances and acquisitions under arrangements entered into before commencement remain protected. The fund, lease, property, liquidity and lender policy still need to work.
Does commercial finance approval confirm GST or duty treatment?
No. The lender assesses credit and security. GST, going-concern treatment, duty, land tax, ownership and deductions require current advice from qualified tax and legal professionals.
How long does commercial approval take?
A clean, straightforward transaction can progress in weeks, but valuation, lease, entity, legal, environmental, complex income and credit questions from the lender can extend it. Start policy and property triage before finance dates become tight.
What documents should I prepare first?
Start with entity documents, ID, business financial and tax evidence or an accepted alternative evidence pack, ATO position, debt schedule, bank conduct, contract or refinance statements, leases, rent ledger, outgoings, insurance and any property-specific reports.
What is the most important commercial-loan comparison?
Whether the facility remains serviceable, flexible and refinanceable under realistic value, income and rate assumptions. Rate matters, but the wrong property policy, DSCR method, review condition or maturity can cost much more.
Why does the lender care about the industry if the property is strong?
Because the business or tenant usually produces the cash that repays the loan, and the industry affects how durable that income is. Regulation, working capital, customer concentration, operator capability, capex and the number of replacement users can also affect valuation and the fallback exit.
What extra checks can apply to a service-station property?
The lender and valuer may need environmental and site-history information, underground-fuel-system and tank records, equipment ownership, lease responsibility for remediation, insurance, access/traffic and evidence of alternative use. A strong tenant does not remove contamination or clean-up risk.
How is childcare property finance assessed?
The lease or operator earnings matter, but so do provider and service approvals, CCS status, occupancy, staffing, compliance history, operator concentration, property design and demand from alternative operators. The property can be valuable while the operating approval remains a separate risk.
Does hotel or motel finance rely on rent or trading profit?
It depends on the transaction. A leased accommodation property may be assessed primarily from lease income, while a freehold-going-concern purchase usually requires the trading business, property, goodwill, inventory, management and working capital to be separated and assessed together.
How can pharmacy or franchise rules affect the finance?
Location or operating approval, the franchise agreement, transfer and renewal rights, supplier and stock terms, capital-expenditure obligations and the alignment of the lease with the business agreement can affect income continuity and exit. Legal and industry-specific due diligence is separate from loan approval.
Why can self-storage, SDA or aged-care-related property need more evidence?
Self-storage can rely on sustainable occupancy, unit mix and ramp-up rather than one lease. SDA and aged-care-related property operate under different registration, design, enrolment, quality and provider rules. In each case the lender needs to understand demand, operator capability, compliance and alternative use—not only the building cost.
Market facts, planning ranges and industry considerations serve different purposes.
Market statistics provide broad context. Planning ranges help with early budgeting. Industry and property considerations help identify the questions that may affect an individual transaction.
How to use the planning ranges
The LVR, DSCR, term and evidence figures in this guide are broad Australian planning ranges. They are designed to help borrowers budget and understand which factors may move an outcome before a specific lender assessment. They are not market maximums, lender quotes, eligibility rules or approval limits.
The high and low ends may not be available together. Actual outcomes depend on the borrower, purpose, property, location, loan size, lease, cash flow, evidence, lender appetite and current policy.
How to use the industry considerations
Different industries and property uses can introduce additional credit, valuation, regulatory and operating risks. Common considerations include operator strength, approvals, revenue durability, working capital, capital expenditure, environmental exposure, specialised improvements and alternative use.
These considerations are general. They do not determine lender eligibility and do not replace current legal, tax, valuation, regulatory or credit advice for a particular transaction.
How to read the market context
The APRA and RBA figures provide system-level and broad-market context. They do not determine the value, financeability or lender treatment of a particular property. Review dates are shown so readers can distinguish dated market observations from more durable lending considerations.
Primary public and official sources
- Market Reserve Bank of Australia — Financial Stability Review, March 2026: businesses and commercial real estate.
- Market APRA — quarterly ADI property exposures, March 2026.
- Official ASIC — National Credit Code.
- Legislation Treasury Laws Amendment (Tax Reform No. 1) Act 2026 — Schedule 5.
- Government business.gov.au — taxes on business property.
- Official Australian Taxation Office — GST and property.
- Environment EPA Victoria — contamination from underground petroleum storage systems.
- Childcare Australian Government Department of Education — National Law and CCS approval process.
- SDA NDIS — SDA design standards and certification.
- Aged care Aged Care Quality and Safety Commission — provider registration.
- Pharmacy Australian Government Department of Health, Disability and Ageing — Pharmacy Location Rules.
- Franchising ACCC — Franchising Code of Conduct and current commencement rules.
Current-policy check required: Commercial lending policy, pricing and risk appetite can change. Confirm current requirements before relying on a specific range or structure.
Calculator
Commercial Property Calculator
Model debt, repayment, LVR and DSCR assumptions before lender selection.
Explore → ServiceCommercial Mortgage Broker
Compare the actual borrower, property, lease, evidence and facility structure.
Explore → ServiceEquipment & Asset Finance
Separate shorter-life vehicles, machinery and equipment from the property facility where appropriate.
Explore → GuideSMSF Property Investment Guide
Use the current post-reform guide for business-real-property LRBAs and protected earlier arrangements.
Explore → GuideCommercial Property Deposit & LVR
Work through deposit, valuation-gap and leverage planning in more detail.
Explore → GuideCommercial Property DSCR Explained
See how accepted income, debt service and assessment methods change the ratio.
Explore → GuideCommercial Property Valuation Process
Understand income, comparable-sale and specialised-security valuation issues.
Explore → GuideCommercial Loan Covenants & Annual Reviews
Review ongoing reporting, monitoring, covenant and revaluation risks.
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AUTHOR & REVIEWER
David Warburton — Mortgage & Finance Broker
David combines commercial-banking experience and mortgage broking to explain why outcomes change across property type, industry, cash flow, lease, evidence and facility structure. The purpose is to help borrowers classify the transaction, identify the real risks and prepare a stronger application—not to turn a general guide into a lender-specific approval prediction.
FROM POLICY RANGE TO TRANSACTION DECISION
Put the property, lease, business cash flow, industry risks, evidence and complete funding stack into one commercial-finance review.
The calculator can model LVR, repayments and DSCR. The service page can compare lender fit and facility structure for the actual borrower and property. Neither replaces valuation, legal, tax or formal lender approval.