Commercial Loans in Australia: What Banks Won’t Tell You (But Your Broker Will)

by Rick Sethi

in Commercial Loan

11 Apr 2026

Australia’s business lending market just crossed $1.2 trillion — and yet one in five small businesses still walked away from a lender empty-handed in 2025. That gap isn’t about whether you qualify. It’s about whether you know how to navigate a system that’s fundamentally different from anything you’ve dealt with in residential lending. This guide breaks down exactly how commercial loans work in Australia in 2026: how rates are set, what lenders are actually assessing, which documentation type could save you tens of thousands, and how to position your application so lenders compete for your business — not the other way around.

Key Takeaways

• Commercial loans are assessed on the property’s income-generating potential and lease strength — not just your personal income — meaning a well-tenanted asset can unlock far better terms than your financials alone suggest.
• Full Doc commercial property loans start from 6.15% p.a., while Low Doc options range from 7.89%–9.29% p.a. — the documentation choice you make before applying could cost or save you $20,000 per year on a $1,000,000 loan.
• Unlike residential mortgages, commercial lenders do not offer Lenders Mortgage Insurance (LMI), so you’ll generally need a 30–35% deposit — though select lenders offer up to 80–85% LVR for the right applications.
• Commercial loan rates are individually negotiated, not publicly advertised — which means a specialist broker with access to 40+ lenders is often the single most valuable move you can make before signing anything.

What Makes Commercial Lending Completely Different

The Income Test That Reshapes Everything

Most business owners walk into a commercial loan conversation assuming it works like a home loan. It doesn’t. With a residential mortgage, the bank wants to know if you can service the debt. With a commercial loan, the bank wants to know if the asset can — and whether that income is likely to hold. This single difference reshapes how you prepare, what you present, and what rate you’re ultimately offered.

Paul Cleary, Director of Synergy Commercial Property Finance in Melbourne, puts it plainly: a property’s value is essentially the sum of its future cashflow. That means a warehouse with a five-year lease to a national logistics company is assessed very differently from the same building sitting vacant — even if your personal balance sheet is identical. Here’s what lenders actually weight when reviewing a commercial application:

Understanding this framework before you apply — rather than after a decline — is what separates a smooth approval from months of back-and-forth with the wrong lender.

No LMI, No Shortcuts — What the Deposit Requirement Really Means

Here’s the myth bust most guides skip: you cannot use Lenders Mortgage Insurance (LMI — a fee that protects the bank when your deposit is under 20%, not you) to access a high-LVR commercial loan the way you can with a residential mortgage. Commercial lenders simply don’t offer it. That means the standard minimum deposit sits at 30–35%, which translates to a maximum LVR — Loan-to-Value Ratio, or how much you’re borrowing relative to the property’s value — of 65–70%.

But before you close the tab, here’s where it gets interesting: select lenders do offer up to 80–85% LVR for the right applications. The key variables are your documentation type, asset quality, and — in many cases — whether a broker knows which lender is actively competing for that deal type. Take Sophie, a 42-year-old GP in Adelaide who wanted to purchase her own specialist medical suite rather than continue leasing. Her accountant told her she’d need a 35% deposit. Her commercial broker found a lender with an 80% LVR product for healthcare professionals — cutting her required capital almost in half and keeping her existing equity working elsewhere.

• Standard LVR range: 65–70% for most commercial lenders
• Higher LVR possible: Up to 80–85% for Full Doc, premium assets, strong borrower profiles
• No LMI available: A larger deposit or existing equity is required — there’s no shortcut around this
• LVR directly affects your rate: Borrowing at 60% LVR will attract meaningfully better pricing than 80% LVR with the same lender

How Rates Are Set — and Where the Real Negotiation Happens

The Hidden Pricing Engine Behind Every Commercial Rate Quote

What if the rate on your commercial loan was never meant to be the first number you see — but the last one you negotiate? Unlike residential home loans, where rates are published daily and comparison sites do the heavy lifting, commercial loan rates are individually priced for risk. There is no public rate card. No table that tells you Bank A is 0.3% cheaper than Bank B this week. Every quote is built from your specific risk profile — and that means every quote is negotiable.

The RBA’s cash rate provides the base. Lenders add a margin above it based on their read of your risk. The RBA cut the cash rate three times in 2025, bringing it from 4.35% down to 3.60% before nudging it back to 3.85% in early 2026. Variable-rate commercial borrowers who refinanced during the 2025 cuts captured real savings — CBA and Pepper Money both passed through the full 0.25% August cut. But here’s what that rate cycle also did: it intensified competition between lenders. With more capital chasing quality commercial deals, borrowers with strong applications have more leverage than they’ve had in years.

As 2026 unfolds, finance options for Australian businesses and investors are improving. Lenders are competing harder, approval pathways are becoming more flexible, and borrowers have more choice than in recent years. — SmartSearch Finance, 2026 Commercial Lending Outlook

The margin above the base rate is where the real negotiation happens. A broker who regularly places commercial deals knows which lenders have the appetite — and the flexibility — to sharpen their pencil for your application.

Full Doc, Lease Doc, Low Doc — The Decision That Shapes Your Rate Before You Apply

The single most controllable variable in your commercial loan rate is your documentation type. Most borrowers don’t realise this until after they’ve signed. There are three main documentation pathways for commercial property loans in Australia, and the rate difference between the best and worst option can exceed two percentage points per year. On a $1,000,000 loan, that’s $20,000 in extra interest every single year — before compounding.

Here’s what that difference looks like in numbers:

If you’re currently in Low Doc territory, ask your accountant: what would it take to qualify for Full Doc in the next 12 months? For many self-employed borrowers, lodging two years of financials is the highest-return financial decision they can make before their next commercial purchase — not just for the rate, but for the maximum LVR they can access.

Secured vs Unsecured: Matching the Structure to the Need

When Collateral Is Your Cheapest Asset

You’ve found the right commercial property. The question now is: what’s the smartest way to fund it? For most commercial property purchases, a secured loan — where the property or other business assets serve as collateral — is the correct choice. But understanding why it’s cheaper, and by exactly how much, helps you make a sharper decision when it counts.

Secured commercial loans in Australia currently range from approximately 6.29% to 15% p.a. Unsecured commercial loans — where the lender assesses your creditworthiness alone, no physical asset backing the debt — range from 12% to 20% p.a. The gap is not subtle. On a $500,000 facility, a 6% difference in rate costs $30,000 per year. Over five years, that’s $150,000 in additional interest before any compounding effect.

• Secured loans: Lower rates from 6.29% p.a., higher borrowing limits, longer terms — ideal for property purchases and major capital investment
• Unsecured loans: Higher rates from 12% p.a., faster approval (sometimes same day), no collateral needed — best suited to short-term cash flow gaps or working capital
• Hybrid approach: Some business owners use a secured property loan for the asset and a separate unsecured facility for operational flexibility — keeping long-term cost low while maintaining short-term liquidity

The good news? With Australia’s business lending market at $1.2 trillion and growing 9.3% year-on-year, lenders are actively competing for quality secured deals — particularly in industrial, medical, and professional services sectors where income risk is lower.

Credit Score, Serviceability, and the Numbers Lenders Check First

Most business owners focus entirely on the deposit and forget about the credit score — until a lender declines their application and asks them to come back in six months. For commercial real estate loans, lenders generally want to see a credit score of 650 or higher. Below that threshold, your options narrow to specialist non-bank lenders who will price the additional risk into a higher rate.

Take Marcus, a 36-year-old owner of a transport business in Brisbane who found a warehouse perfectly positioned near the Inland Rail corridor. His deposit was solid. His business was profitable. But three overdue trade accounts from a tough COVID year had dragged his credit score to 605. His bank declined him. A specialist commercial broker found a non-bank lender with a credit-impaired product — Marcus secured the warehouse at 8.6% p.a., refinanced to a major bank 18 months later once his file was clear, and dropped to 6.8% p.a. Knowing the pathway matters as much as knowing your current position.

Beyond credit score, lenders also assess serviceability — whether the combined income from the property and your business can comfortably cover repayments. APRA (the Australian Prudential Regulation Authority) requires lenders to apply a 3% buffer above your actual rate when stress-testing affordability. If you’re borrowing at 7%, the bank is assessing whether you could afford 10% repayments. Factor this into your planning well before you apply.

The 2026 Market — Where Lender Appetite Is Strongest

A $1.2 Trillion Market and What the Timing Tells You

New business loan commitments for property purchase surged 32.9% year-on-year in the December 2025 quarter. That’s not noise — it reflects a specific convergence of conditions that sharp borrowers are moving on right now. Understanding it helps you time your approach strategically rather than reactively.

Business credit growth rose 8.9% in the year to March 2025 — the highest annual increase since May 2023 — with commercial lending outpacing personal lending for five consecutive quarters. NAB and CBA both recorded double-digit year-on-year growth in their business loan books. The market demand index for business lending hit +53 in December 2025. These aren’t abstract numbers — they signal that lenders are actively chasing quality commercial deals, which gives prepared borrowers genuine leverage in rate negotiations. The strongest growth sectors for new commercial lending in 2025–2026 include:

• Industrial and warehousing — driven by e-commerce and infrastructure investment in Western Sydney, South East Queensland, and outer-metro Melbourne
• Medical and healthcare — premium, well-located medical suites viewed as lower risk, attracting competitive rates
• Professional services — strong demand from accounting, legal, and consulting firms purchasing their own premises
• Agriculture and manufacturing — among the strongest growth sectors for new commercial lending nationally in 2025–2026

Sectors where lenders are applying more scrutiny: construction, hospitality, and retail, where insolvencies remain elevated. If your business operates in one of these sectors, specialist broker guidance on lender selection is more important than usual.

Non-Bank Lenders: The Option Most Business Owners Overlook

The assumption that you must go to a major bank for a commercial loan is costing Australian business owners money. Non-bank lenders — including Pepper Money, Liberty Financial, and a growing roster of specialist funders — are playing an increasingly prominent role in commercial lending, and in many cases they’re offering more flexible pathways than the big four at only marginally higher rates.

Liberty Financial Group reported net profits after tax of $76.4 million for the half-year ending December 2025, driven significantly by SME and SMSF lending growth. That growth didn’t come from undercutting banks on price alone — it came from solving problems the banks couldn’t or wouldn’t: complex structures, irregular income, credit-impaired histories, short trading records. Here’s how to think about your lender options:

But before we get there — comparing these options without a broker is like negotiating a commercial lease without a solicitor. You might get there eventually. But you’ll leave value on the table.

Building an Application That Gets Lenders Saying Yes

The Pre-Application Work That Changes Your Outcome

What if the work you do before lodging your application is worth more than anything that happens after? For commercial loans, preparation is not a formality — it’s a negotiation tool. Lenders price for perceived risk. Reduce the perception of risk before they form it, and you change the rate offered before a single document is assessed.

Here’s the pre-application checklist experienced commercial brokers use with their clients:

1. Check and clean your credit file: Order your report from Equifax, illion, or Experian at least 60 days before applying. Dispute errors. Clear outstanding defaults where possible. Target 650+.
2. Get your financials lodged and current: Two years of business tax returns, financial statements, and BAS — up to date and lodged, not just prepared.
3. Secure or extend your lease: If you’re purchasing an investment property, a long-term lease with a quality tenant — secured before you apply — can materially improve your LVR and rate.
4. Calculate your LVR strategically: If you can bring your LVR below 65–70%, do it. Additional equity from another property or a larger deposit shifts you into a meaningfully better pricing tier.
5. Engage your broker before you find the property: Not after. A commercial broker can identify the right lender for your profile, structure the application for approval strength, and in many cases secure pre-approval within 2 business days for strong applications.

The business owners who secure the best commercial loan terms are not always the ones with the strongest balance sheets. They’re the ones who present most clearly, to the right lender, at the right time.

Why Your Advisory Team Is the Real Competitive Advantage

A bigger deposit doesn’t guarantee a better commercial loan. But the right team almost always does. Commercial loan contracts are significantly more complex than residential mortgages. The due diligence required is greater. The negotiation is more nuanced. And the cost of getting it wrong — whether that’s an unfavourable rate, a restrictive loan covenant, or a missed approval — is measured in tens of thousands of dollars, not hundreds.

Paul Cleary of Synergy Commercial Property Finance recommends assembling your advisory team before making any decisions: a commercial mortgage broker, accountant, solicitor experienced in commercial property, and a financial advisor. Each plays a specific role:

• Commercial mortgage broker: Accesses 40+ lenders, structures the application, negotiates rate and margin, manages the approval process end to end
• Accountant: Ensures financials are presentation-ready, advises on entity structure, optimises tax position ahead of the purchase
• Commercial solicitor: Reviews the loan contract, advises on guarantees and covenants, conducts property due diligence
• Financial advisor: Stress-tests the investment against your broader portfolio and advises on fixed vs variable structure based on your risk tolerance

OnDeck Australia’s Q4 2025 data shows 34% of SME loan applicants were seeking expansion capital — up from 23% a year earlier. The business owners driving that shift aren’t navigating commercial finance alone. They’re building the right team first, and letting that team build the right outcome.

Commercial lending in Australia is more competitive, more flexible, and more accessible than it’s been in years — but only for borrowers who understand how the system works. You’ve now seen the full picture: how rates are built, which documentation type to target, which assets attract the strongest lender appetite, and how to structure an application that puts you in the strongest possible position. The smartest next step is a conversation with a specialist commercial broker who can match your situation to the right lender — before you commit to anything. Our team works across the full spectrum of commercial lenders and is ready to help you find the structure that works.

Frequently Asked Questions

How much deposit do I actually need for a commercial property loan in Australia?

Most commercial lenders require a minimum deposit of 30–35%, which equates to a maximum LVR of 65–70%. However, select lenders offer up to 80% LVR for strong Full Doc applications with quality assets, and some specialist non-bank lenders will go to 85% LVR in specific circumstances — particularly for healthcare professionals and premium asset types. Unlike residential mortgages, commercial lenders don’t offer Lenders Mortgage Insurance (LMI), so there’s no way to buy down the deposit requirement. You’ll need to bring the equity or find a lender with a genuine high-LVR product suited to your asset.

What’s the real difference between Full Doc and Low Doc — and is it worth the effort to qualify for Full Doc?

Yes — almost always. Full Doc commercial property loans start from 6.15% p.a., while Low Doc options range from 7.89%–9.29% p.a. On a $1,000,000 loan over five years, that difference can exceed $85,000 in total interest. Full Doc requires two years of lodged business tax returns, financial statements, and BAS. If you’re currently self-employed and operating on Low Doc, ask your accountant what a 12-month roadmap to Full Doc eligibility looks like. For most business owners, it’s the highest-return financial preparation they can do before their next commercial purchase.

Do I need a commercial mortgage broker, or can I just go to my bank?

You can go direct to a bank — but you’ll almost certainly pay more and potentially receive a less suitable structure. Commercial loan rates are individually negotiated, not publicly advertised, which means a bank’s first offer is rarely its best, and you have no benchmark without access to the broader market. A specialist commercial mortgage broker with access to 40+ lenders can identify which lenders are actively competing for your deal type, structure your application for maximum approval strength, and negotiate the margin above the base rate on your behalf. For most borrowers, the broker’s access to better pricing more than offsets any fee involved.

How does the RBA cash rate affect my commercial loan — and should I fix or go variable?

If you hold a variable-rate commercial loan, your rate moves with the RBA cash rate — though lenders control exactly how much of each movement they pass through. The RBA cut rates three times in 2025, reducing the cash rate by 75 basis points in total, before raising it by 25 basis points to 3.85% in early 2026. Variable-rate borrowers who refinanced during the 2025 cuts locked in real savings. Fixed-rate borrowers are protected from rate rises during their fixed term but lose the flexibility to refinance without break costs. Whether to fix, go variable, or split depends on your cash flow certainty and risk tolerance — it’s one of the most valuable conversations to have with your broker before you settle on a structure.

Rick Sethi