How is a commercial loan different from a home loan?
A home loan looks mainly at your personal income and repayment ability. A commercial loan also looks at the business and the security. Lenders typically focus on the company’s profitability and cash flow, how long it has traded, the type and use of the property, and your other assets and liabilities.
In general, commercial lending is assessed in more detail, needs more documents, and the terms (loan-to-value ratio, rate, loan term) often differ from residential lending. The specifics vary by lender and by loan type, so the same business can get very different offers from different lenders.
Common types of commercial loan
- Standard commercial loan: secured by the commercial property being bought, suited to offices, shops and warehouses.
- Commercial loan secured by residential property: secured against a home you already own, giving more flexibility in how a business purchase is funded.
- Line of credit: a limit you can draw on, repay and draw on again, suited to seasonal or cyclical cash needs.
- Farm finance: farmland purchase, machinery and seasonal working capital.
- Franchise and chain-store finance: buying and fitting out outlets for restaurant or retail expansion.
- Invoice finance: borrowing against unpaid invoices so you get cash sooner instead of waiting for customers to pay.
Commercial property or your home as security?
This is the question business owners wrestle with most.
- Using the commercial property itself: keeps the business and your home separate, so risk is relatively contained.
- Using your home: gives more flexibility and can sometimes make funding easier to arrange, but if the business runs into trouble, your home is exposed too, so weigh it carefully.
Neither is always better. It depends on your asset structure, how stable the business is, and how much risk you are comfortable with.
Fixed or variable rate?
Variable is more flexible but moves with the market. Fixed locks in your repayment, which helps cash flow planning. Which suits you depends on the business’s funding cycle. A business with uneven cash flow may value flexibility, while one with steady income that wants to lock in cost may lean fixed.
What documents are usually needed?
- Identification
- The company’s last two years of tax returns and financial statements
- Your personal last two years of tax returns and notices of assessment
- Details of the property you are buying or offering as security
- Your current assets and liabilities
The checklist varies with loan type and amount. Documents that are organised and consistent usually save a lot of back-and-forth.
Want to talk through your business?
Read about our commercial loan service or book a free consultation. Tell us the type of business, the property you want or what the funds are for and an advisor will match you with suitable lenders and structure. The assessment is free, with no fee if we cannot succeed.
This article is general information only and not personal financial or legal advice. Loan-to-value ratios, rates, terms and document requirements vary by lender and loan type and change over time; rely on the lender’s latest requirements. Written October 2026.
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