Commercial lending isn't one-size-fits-all. Neither is the strategy behind it.
Buying a warehouse for your business is different from purchasing a tenanted commercial investment.
Funding a medical practice is different from refinancing a commercial property.
And a lender assessing a company borrower may ask very different questions from a lender assessing an individual investor.
At Evermore, we start by understanding the transaction, the borrower, the property or business purpose and what the finance is intended to support.
Then we assess the lending options around it.
Because commercial finance should be structured around the purpose, not squeezed into a template.
Before we talk about rates or lenders, we want to understand what you're financing.
Are you buying premises for your own business?
Purchasing a commercial investment?
Refinancing existing commercial debt?
Funding a business acquisition or expansion?
Releasing equity from a commercial property?
The purpose of the finance can influence the lender, loan structure and assessment pathway.
We'll also consider the proposed borrower, available contribution, business income, lease position and broader financial circumstances.
Purchasing premises for your business can create different lending considerations from a commercial investment.
The lender may assess the business's ability to support the debt, the property offered as security and the proposed contribution.
For a tenanted commercial investment, the lease, tenant, rental income, remaining lease term and property type may form part of the lender's assessment.
The valuation may also consider the income generated by the property.
Some commercial lending options may place greater emphasis on the property and eligible lease income rather than a traditional full assessment of business or personal income.
Eligibility and lender requirements vary.
A full-doc commercial assessment may consider business financial statements, tax returns, income and existing commitments.
For self-employed borrowers and business entities, understanding the financial story behind the numbers can be important.
Commercial property and business lending is often undertaken through companies or trusts.
Lenders may require guarantees and may assess related entities where income or financial support is relied upon.
Eligible commercial property may be acquired through an SMSF in appropriate circumstances.
SMSF property finance involves specialised borrowing and legal structures.
Commercial property valuations can differ from residential valuations.
Depending on the property, a valuer may consider the lease, rental income, market rent, property type and comparable commercial transactions.
The loan-to-value ratio, or LVR, compares the proposed loan with the lender's accepted value of the security.
Maximum LVRs can vary depending on the lender, property type, location and transaction.
Commercial loan terms can differ from standard 30-year residential lending.
The loan term and repayment structure can have a significant impact on required repayments and cash flow.
Interest-only periods may be available in some commercial lending scenarios, subject to lender policy.
The loan balance is not reduced through the required interest-only repayments, and the longer-term cost and future repayment position should be understood.
Where a company or trust borrows, lenders may require guarantees from directors, trustees or other related parties.
The exact requirements depend on the borrower, lender and transaction.
Rate matters.
So do the loan term, amortisation, fees, valuation, lender appetite, borrower structure and ongoing flexibility.
A commercial finance recommendation should consider the complete transaction.
We look at the cost of the finance. We also look at how the finance works.
