Perth Commercial & Business Loans

New business loans Applecross

Commercial Property Loans Perth:

Commercial loans are different to residential loans. They are secured against anything that is considered as a commercial property such as offices, ware houses, factory units, retail outlets, anything that has a direct link to businesses and isn’t going to be used for residential living.

 

Differences to residential Home Loan lending:

Unlike residential lending, the borrower can only borrow up to 80% of the property value in most cases, most lenders will lend less than this, 65% to 70% is more common. There is no mortgage insurance on a Commercial Loan. A typical commercial loan is more expensive than a Home loan both in interest rates and in set up cost, for example the valuation can start at around $1000 for small commercial property and can take up to 10 days to get the final report. If the value of the property is up over a Million dollars then the valuation will be higher.

In some cases, residential properties can be used as additional security to acquire a business or commercial property, allowing the lender to utilize 100% of the property’s value. However, policies governing this can be intricate. It’s strongly advised to consult with our Commercial Mortgage Broker for a tailored strategy. There are specific conditions that must be met by the client for a lender to accept 100% of the residential property. 

Application fees are in most cases a percentage of the loan amount. The loan term can also be shortened, quite commonly a Commercial Mortgage loan will be over a 15-year period unlike a typical home loan term of 30 years. There are some lenders that offer the 30-year period but most of the bigger lenders will not. It is the astute broker that has the knowledge of which will be able to match the commercial or business lender to the what the borrower is looking for. Not all lenders will have the appetite for every situation and the experienced broker will no what lender is going to be suited to do what the client is looking for.

Commercial Business Loans Application Process:

Applications are more complex than residential lending. Residential lending will want some payslips and a PAYG Summary, some statements and fill out a form. Commercial applications are more involved than that. A Broker will know that there has to be a business case put forwarded to the lender to sell the customer and what they want to achieve.

Quite often the purchaser is self-employed so the broker will take the time to understand what the business is about and any items that need to be explained in the financial statements or tax returns. The formulas for working out affordability serviceability is much more complex, when working out affordability with residential lending the client can look up any home loan calculator to get an understanding of the interest repayments and gauge affordability. It is not that simple for commercial lending, therefore when making an application it is important that there is a good broker organizing the loan, they will save you time and frustration and they will also negotiate to get competitive rate and cost structure.

Loan terms often align with lease agreements. When purchasing a business with an existing lease, the loan term typically matches the remaining lease duration. This could significantly influence the ability to manage loan repayments and might pose a challenge in securing a Business Mortgage. A seasoned Commercial and Business Broker understands the requirements and can recommend suitable lenders. At Morgan Finance WA, our expertise includes these specific loan types. We’ve recently arranged loans for businesses in O’Connor, Myaree, Melville, and Cockburn Central.

 Types of Business Lending

Business Start-up Loans

Starting a business is no mean feat. There are many costs involved, from monies to purchase property or rent space, to funds for marketing and purchasing the inventory. Luckily, there are some lenders who provide business lending to start-ups. These types of loans are among the most popular business loan requests. To qualify for these types of loans, borrowers must either have existing assets to pledge as security or prove that they can repay the loan through the cash flow of the business.

Lenders prioritize clients with industry-specific experience or the necessary skills for success in their field. Business lenders aim to support individuals with the right background or training. Recently, we successfully funded a patisserie in Morley and a transport business in Bibra Lake and also a business loan for an Italian Restaraunt in Fremantle. These clients had to provide cash flow forecasts and business planning, prerequisites for loan approval by the lender.

Franchise Lending

Franchising is a business model whereby one is allowed to operate under another established business’ trading name and sells its services and/or products for a specified period. Various banks have specific franchise lending policies to financially support particular franchising businesses. These bank policies can allow franchises to utilize their franchise business as collateral for any business lending they require. The LVR (lending value ration) often ranges from 30-70% of the market value of the franchise business. So, cash and/or other collateral (i.e. property) is usually required to support a transaction. We have experience in Franchise lending, we have organise business loans to purchase an Ultra Tune garage in Canning Vale, Refinancing a business loan for a Jamaica Blue Coffee shop in Booragoon. 

Equipment Finance

Equipment loans cater to businesses in need of essential tools to facilitate their revenue-generating activities. Typically, the financed equipment serves as collateral. With a favorable credit report and the ability to demonstrate the necessity of the equipment while assuring the funding won’t be diverted elsewhere, one can qualify for equipment finance. Usually, the lender conducts a valuation of the equipment and often seeks control over it. While clients can offer some security, the advantage of Equipment Finance is that clients need not leverage their property to secure the loan. While cars are a common purchase, we’ve successfully secured Equipment Finance for diverse needs, including a forklift in Myaree, commercial boat operating out of East Fremantle, and facilitated a Chiropractic fit-out for a startup business in Como..

Call us about Commercial & Business lending now on 0429417949

Morgage Kardinya