When to Use Commercial Finance to Expand Your Business

If your business is outgrowing its space, kit or cash flow, the right loan depends on what you are buying. Property, equipment and day-to-day working capital each suit a different structure.

This guide is for Robina business owners deciding how to pay for the next step.

When Does a Commercial Property Loan Make Sense for Expansion?

A commercial property loan makes sense when you plan to stay in a location for years and want to own the space instead of renting it. The main trade-off is that you tie up a large deposit and take on a long-term debt.

Buying commercial property can suit a business that has outgrown its lease, such as a growing trade or services firm needing a warehouse or office. Lenders usually look at the property type, your business income and the deposit you bring. Commercial LVR limits are often lower than for home loans, so expect to need more of your own funds. The exact limit depends on the lender and the property. You can read more about our commercial property loans if you are weighing up a purchase.

If your super fund is part of the plan, an SMSF loan may be an option for buying a business premises. It comes with strict rules, so get advice from your accountant and a specialist first.

Secured vs Unsecured Commercial Loans: What Is the Difference?

A secured commercial loan is backed by an asset such as property, while an unsecured loan has no asset behind it. Secured loans usually offer larger amounts and lower rates, but you risk the asset if you cannot repay. Unsecured loans are typically smaller and often cost more.

If you already own a property, using it as collateral can unlock a bigger loan amount. Unsecured finance can suit a smaller boost, like a short marketing push or a new hire, where you do not want to put property on the line. Our business loans page covers the general options.

How Do You Fund New Equipment Without Draining Cash?

Equipment finance lets you buy or upgrade machinery and vehicles by spreading the cost over time, with the equipment itself usually acting as the security. The trade-off is that you pay interest on top of the purchase price, and the lender may hold a claim over the asset until the loan is repaid.

This suits a business buying new equipment or upgrading existing equipment, because the repayments can line up with the income the equipment helps produce. Have a look at our equipment finance and asset finance pages for how this works.

Example: A Robina Cafe Owner Adds a Second Kitchen

A company that matches the loan to the purpose usually ends up with a cleaner repayment plan. Consider a cafe owner in Robina who wants to open a production kitchen and has two needs: a fit-out and extra equipment, plus some working capital for the first few months.

The situation: the owner first thinks about one large loan against their home. The solution: a broker suggests splitting it. The ovens and other equipment go on equipment finance, secured by that equipment. The fit-out may need a different structure, such as a business term loan or a landlord contribution, and whether it is funded depends on the lender. A small revolving line of credit covers wages and stock while sales ramp up.

As an illustration, say the equipment loan is $120,000 over five years at an illustrative 6.75% p.a. The repayment would be about $2,362 a month. The line of credit is only drawn when needed, so interest is paid on the balance used, not the full limit, plus any fees.

The outcome: the home may not need to be used as security, but the lender may still ask for other security or personal guarantees. The equipment repayments are predictable, and the owner pays interest only on the drawn balance, plus any fees. A line of credit can carry fees as well as interest. The trade-off is that the line of credit usually has a variable rate and a limit the lender can review. Real rates depend on the lender and your business profile.

Do You Need Bridging Finance or Progressive Drawdown for a Build?

Bridging finance covers a gap between buying one property and selling another, while a progressive drawdown loan releases money in stages as a build moves along. Both can be useful, but both can cost more than standard lending and need a clear exit plan.

If you are building a new premises, a commercial construction loan usually pays the builder in stages, and you pay interest only on the amount drawn so far. Have a chat about our development finance and construction loans options. The risk with bridging is that if your sale is delayed, you may carry two loans at once, so talk through a back-up plan before you commit.

Can You Refinance a Commercial Loan to Free Up Funds?

Yes, a commercial refinance can free up funds if your property has grown in value or you have paid down debt, but the lender will assess the property again. Costs such as valuation, legal fees and possible break costs on a fixed rate can eat into the benefit.

It is worth checking whether a different loan structure, such as fixed or variable rates or a split between the two, suits your plans. A fixed rate gives certainty, while a variable rate can move with the market and may allow extra repayments. Our commercial loans team can help you compare, and you can start with a loan health check.

We can compare options from a range of lenders.

Call one of our team or book an appointment at a time that works for you, and we will map out the right finance for your next move.

Frequently Asked Questions