When applying for a commercial loan in Perth, understanding the various terms and structures available can significantly impact your business's financial success. Commercial finance encompasses a wide range of lending products designed to support business growth, from buying commercial property to upgrading existing equipment.
Types of Commercial Loan Structures
Commercial lenders offer various loan structures to accommodate different business needs:
• Secured Commercial Loan: Uses collateral such as commercial property or business assets to secure the loan amount, typically offering lower interest rates
• Unsecured Commercial Loan: Requires no collateral but generally features higher interest rates due to increased lender risk
• Progressive drawdown: Allows businesses to access funds in stages, particularly useful when buying commercial land or constructing industrial properties
• Revolving line of credit: Provides ongoing access to funds up to an approved limit, ideal for managing cash flow fluctuations
Interest Rate Options and Repayment Terms
Commercial loans typically offer two main interest rate structures:
Variable Interest Rate: Fluctuates with market conditions, potentially offering lower initial rates but with the possibility of increases over time. Many variable rate loans include redraw facilities, allowing businesses to access additional funds from principal repayments.
Fixed Interest Rate: Remains constant throughout the agreed term, providing certainty for budgeting and financial planning. Fixed rates are particularly beneficial when expanding business operations or making significant equipment purchases.
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Book a chat with a Finance & Mortgage Broker at Luxe Finance Group today.
Flexible Loan Terms and Repayment Options
Modern commercial finance solutions offer flexible repayment options tailored to business cash flow patterns:
- Principal and interest repayments: Regular payments covering both loan principal and interest charges
- Interest-only periods: Temporary arrangements allowing businesses to pay only interest, preserving cash flow during establishment phases
- Seasonal repayment schedules: Aligned with business income patterns, particularly relevant for Perth's seasonal industries
Commercial Property Finance Considerations
When buying commercial property or purchasing industrial property in Perth, several loan structure elements require careful consideration:
• Loan-to-value ratio: Typically ranges from 70% to 80% of the property value
• Settlement periods: Usually longer than residential loans to accommodate due diligence processes
• Specialist valuations: Required for commercial and industrial properties to determine accurate loan amounts
Equipment Finance and Business Expansion
For businesses focused on buying new equipment or upgrading existing equipment, specialised commercial loan terms may include:
• Asset-based lending: Where the equipment itself serves as collateral
• Chattel mortgages: Allowing businesses to claim tax benefits while maintaining equipment ownership
• Operating leases: Providing access to equipment without ownership obligations
Accessing Commercial Loan Options
Businesses can access Commercial Loan options from banks and lenders across Australia through various channels. Working with experienced brokers provides access to multiple lenders simultaneously, often resulting in more favourable terms and streamlined application processes.
Key factors lenders evaluate include:
• Business financial statements and cash flow projections
• Industry experience and management capability
• Existing debt obligations and repayment history
• Proposed use of funds and expected return on investment
Professional Support for Commercial Finance
Luxe Finance Group understands that Perth and West Perth businesses require tailored commercial finance solutions. Our experienced team works with a comprehensive panel of lenders to match businesses with appropriate loan structures, whether you're looking to purchase commercial property, expand operations, or invest in new equipment.
Call one of our team or book an appointment at a time that works for you to discuss your commercial loan requirements and explore the options available for your business.
