Commercial Property Finance in Australia: A Guide to Private Lending for Commercial Assets

Commercial property finance in Australia covers the entire spectrum of loans used to acquire, refinance, develop, or release equity from commercial real estate assets. That spectrum includes offices, retail premises, warehouses, industrial facilities, factories, childcare centres, medical suites, hotels, and mixed-use developments. In 2026, with major bank commercial credit policies tightening on serviceability, LVR, and pre-leasing, private lenders have become a primary source of capital for commercial property buyers, owners, and developers across every state and territory.

This guide explains how commercial property finance works through private lenders in Australia in 2026. You will find LVR ranges by property type, indicative pricing, real deal walkthroughs across Sydney, Melbourne, and Brisbane, a side-by-side comparison with major bank commercial loans, and a clean submission checklist that gets you from enquiry to settlement in 1 to 3 weeks.

What Is Commercial Property Finance?

Commercial property finance is loan funding secured against commercial real estate, written for business or investment purposes rather than owner-occupier housing. The product covers acquisition (purchasing a new commercial asset), refinance (replacing an existing commercial mortgage), equity release (drawing capital from existing commercial property for any business purpose), and development (funding the construction of new commercial buildings).

Lenders treat commercial property differently to residential. Valuations rely on capitalisation rates, comparable sales, and lease income rather than residential comparables. LVR caps are tighter (typically 55%–70%) to reflect the specialist nature of the asset and the wider value variance. Tenancy quality, lease term, and property class drive the lender's view of risk more than the borrower's serviceability ratios. This is why a vacant regional retail building is priced and sized very differently to a tenanted metropolitan industrial asset.

Commercial property finance sits outside the consumer credit framework set by the National Consumer Credit Protection Act, with non-bank private lenders supervised by APRA's non-bank financial institutions framework and operating under their Australian Credit Licence requirements where consumer-touching activity is involved.

How Commercial Property Finance Works in Australia

The end-to-end process is faster than a major bank commercial loan and structured around the security and the exit. A typical file runs:

1. Initial enquiry and indicative offer. You provide property details, purchase price or current value, senior mortgage balance if any, loan amount, purpose, and exit. The lender issues an indicative letter of offer with rate, LVR, term, and conditions within 24–48 hours.

2. Commercial valuation. A panel commercial valuer attends the property, assesses tenancy, lease quality, and market comparables, and delivers a short-form valuation in 5–10 business days. Cost typically $1,500–$4,500 depending on complexity.

3. Due diligence and conditions. The lender reviews tenancy schedules, leases, environmental reports if applicable, and any town planning or zoning constraints. For specialised property (medical, childcare, hospitality), additional industry-specific documentation is required.

4. Loan documents and senior consent. Final loan documents issue once the valuation supports the LVR. For second mortgage structures, the senior lender signs a deed of priority. Borrower signs at the lender's solicitor.

5. Settlement and registration. Mortgage registered with the relevant state land registry, funds advanced to settlement agent or directly to borrower. Most commercial files settle 1–3 weeks from initial enquiry on standard assets, longer on complex or specialised property.

Property Types and Indicative LVR Caps

LVR caps vary materially by asset class. Indicative 2026 ranges:

• Tenanted metropolitan industrial: 65%–70% LVR. Strong, generic-use asset class with deep buyer pools. Lenders treat as the lowest-risk commercial category.

• Tenanted suburban office: 60%–70% LVR. Lease quality and tenant covenant drive the LVR within the range.

• Tenanted metropolitan retail (strata or freehold): 60%–65% LVR on standard high-street retail. Bulky goods and large-format retail typically lower.

• Vacant commercial property: 50%–60% LVR. Lenders price the leasing risk and require a clear exit (lease-up, sale, or development).

• Specialised use (childcare, medical, hospitality): 55%–65% LVR. Industry-specific valuation methodology and operator covenant feed into the assessment.

• Mixed-use (commercial + residential): 60%–70% LVR depending on the residential component. Higher residential weight typically lifts the LVR.

• Regional commercial: 50%–60% LVR. Smaller buyer pools and longer marketing periods drive a more conservative position.

2026 Commercial Property Finance Rates and Loan Sizes

Pricing reflects security, LVR, term, and tenancy strength. Indicative 2026 ranges:

• First mortgage commercial rates: From 9.50%–12.0% p.a. on standard tenanted commercial property, 10.50%–13.5% p.a. on vacant or specialised assets. Establishment 1.0%–2.0%.

• Second mortgage commercial rates: From 1.45%–1.95% per month, paired with a senior bank or non-bank loan. Establishment 1.5%–2.5%.

• Loan sizes: Innovate Funding writes commercial property finance from $250,000 to $20 million. Larger transactions are syndicated.

• Term: 3 to 36 months on private commercial. Longer-term structures (3–5 years) are typically refinanced to a bank or non-bank prime commercial product.

• Interest structure: Interest-only servicing or capitalised interest. Both are common, with capitalisation more common on bridging and equity release.

Worked example: a $4 million Sydney CBD office strata purchase with $1.4 million borrower equity and a $2.6 million first mortgage at 65% LVR. Rate 9.95% p.a., interest-only over 18 months. Annual interest cost approximately $258,700. Establishment 1.5% ($39,000). Valuation and legals approximately $7,500. Total all-in cost over 18 months: approximately $441,800. Exit by refinance to a major bank commercial loan at 7.50% p.a. once the tenancy is repositioned and a 5-year lease is in place.

Real-World Commercial Property Finance Examples

Sydney warehouse acquisition: $3.5M first mortgage, 12 months

A Sydney logistics operator purchased a $5.4 million tenanted Western Sydney warehouse on a 30-day settlement. The major bank could not approve in time. Innovate Funding wrote a $3.5 million first mortgage at 9.65% p.a. over 12 months, interest-only, settled in 13 business days at 65% LVR. The operator refinanced to a major bank commercial loan at 7.45% p.a. at month 11 once the bank's full credit process completed. The 12-month private bridge cost approximately $370,000 against a $1.2 million capital gain on the asset over the same period.

Melbourne medical centre equity release: $1.1M second mortgage, 18 months

A Melbourne medical practice owned its purpose-built clinic outright. The directors wanted to release $1.1 million of equity to fund a fit-out and new diagnostic equipment. Existing senior bank commercial loan was $1.8 million on a $4.6 million asset. Innovate Funding wrote a $1.1 million second mortgage at 1.55% per month, capitalised, over 18 months, with bank consent secured in 4 business days. The fit-out doubled patient throughput, the practice grew revenue by 60%, and the second mortgage was refinanced into a bank consolidation loan at month 17.

Brisbane mixed-use refinance: $2.2M first mortgage, 24 months

A Queensland investor owned a $3.4 million ground-floor retail plus 4-unit residential mixed-use property. An expiring bank loan needed refinancing but the bank declined due to a recent ABN change for the trading entity. Innovate Funding wrote a $2.2 million first mortgage at 9.85% p.a. over 24 months, interest-only, with the option of a short-term business loan top-up structure for working capital. The investor used the 24 months to lift retail rents on lease renewals, then refinanced to a major bank at 7.20% p.a. at month 22.

Bank vs Private Commercial Property Finance

Both options have a place. The choice depends on speed, complexity, asset class, and lease quality:

• Speed: Banks 6–10 weeks from application. Private lenders 1–3 weeks.

• LVR: Banks 50%–65% on standard commercial. Private lenders 55%–75% depending on asset class.

• Documentation: Banks require full financials, 24 months tax returns, BAS, lease schedules, and serviceability. Private lenders accept no-doc structures on stronger security.

• Asset appetite: Banks are restrictive on specialised (medical, childcare, hospitality), vacant, and regional property. Private lenders write across the full range.

• Borrower complexity: Banks decline trust structures, SMSFs, expats, recent ABNs, and credit-impaired profiles. Private lenders work with all of these.

• Pricing: Banks 6.50%–8.50% p.a. for prime commercial. Private 9.50%–13.0% p.a.

• Use cases: Banks suit long-term hold and stabilised assets. Private suits acquisition speed, repositioning, equity release, and bridging to a bank exit.

How to Apply: Submission Pack

A clean commercial submission accelerates the timeline. The business.gov.au borrowing guide outlines general standards every commercial borrower should review. Lenders expect:

• Property details: Address, contract of sale (for acquisitions), recent valuation if available, and current rates notice.

• Tenancy schedule: Tenant names, rent, lease terms, options, and renewal status. Critical input to the valuation and the lender's assessment.

• Financial summary: Net operating income, outgoings, capital expenditure plan, and any vacancy or rent concession history.

• Borrower documents: Trust deed or company structure, ID, ATO portal printout, and bank statements. Self-employed and trading entities may need 12 months of business activity statements.

• Exit strategy: Refinance pre-approval, sale strategy, lease-up plan, or development consent. The exit is more important than the borrower's recent income on private commercial files.

Frequently Asked Questions

Can I get a private loan on vacant commercial property?

Yes. Private lenders assess vacant commercial property on its security value and the borrower's exit strategy rather than rental income serviceability. The LVR will typically be lower (50%–60%) than for a tenanted asset, and the lender will want a clear plan: lease-up and refinance, sale, or development.

What LVR can I expect on commercial property?

Most private lenders offer 55%–70% LVR on commercial property. The specific figure depends on the property type, location, tenancy status, and lease quality. A tenanted metropolitan industrial asset with a long lease will sit at the top of the range. A vacant regional retail premises will sit at the bottom.

How long does commercial property finance take to settle?

Through a private lender, expect 1 to 3 weeks from a complete application to settlement on a standard commercial deal. Complex assets (specialised property, environmental concerns, or multiple-tenancy structures) may take longer due to additional due diligence requirements.

Can I use a commercial property I already own as security for a business loan?

Yes. If you own commercial property with sufficient equity, you can take a first mortgage (if unencumbered) or second mortgage (behind an existing bank loan) to release capital for any business purpose. This is one of the most common use cases for private commercial lending.

Can I finance a commercial development with a private lender?

Yes. Private lenders fund commercial development through a combination of land acquisition, construction, and residual stock facilities. Speed and pre-leasing flexibility are the typical drivers over a bank construction loan, with private lenders often accepting zero pre-leasing on strong sites.

What documents are needed for a commercial property loan?

Property details, tenancy schedule, contract of sale (if buying), borrower entity documents, ID, ATO portal printout, recent bank statements, and an exit strategy. Self-employed borrowers may also need 12 months of business activity statements.

Can I refinance a commercial property to a bank later?

Yes, this is the intended exit for most private commercial files. The standard plan uses the 12 to 24 month private term to stabilise tenancy, complete a repositioning, or wait for a credit issue to age, then refinances to a major bank or non-bank prime commercial lender at a lower rate.

The Bottom Line on Commercial Property Finance Australia

Commercial property finance through a private lender solves a defined set of problems banks cannot. Speed on acquisitions, flexibility on asset class, willingness to fund vacant and specialised property, and acceptance of complex borrower structures. The rate premium over a bank loan is real, but the speed and structure typically pay for themselves on the underlying transaction.

Used as a 12 to 24 month bridge to a bank refinance, private commercial finance is one of the most common deal structures in the Australian commercial property market in 2026. Used as a permanent funding home, it is more expensive than necessary. Match the term to the exit and the rate to the structure, and the product delivers exactly what it is built for.

If you have a commercial property transaction in motion, talk to Innovate Funding for an indicative offer within 24 hours. Visit our knowledge hub for more guides, or contact us to discuss your scenario.