3 ways to borrow 100%

Do you want to buy a commercial property for your business or need business finance but don’t want to dip into your cash flow?

You may be able to get a 100% commercial loan with a combination of equity in an existing residential property that you own, a guarantor or your own business assets including client bookd and equipment.

A mortgage broker can help you put together an application that makes sense to the bank so you can get the business loan you need without having to pay a deposit!

Golden tip

Remember, you can actually use a combination of all three types of security to borrow up to 100% of the commercial property value.

This can often be complex and time-consuming when it comes to applying with the bank but a mortgage broker can make it really easy.

We can properly assess your asset position, get a good idea of the value of your business, and come back with an indicative funding approval for a 100% commercial loan.

Call 1300 889 743 or fill in our online enquiry form to speak with one of our specialist mortgage brokers to find out if we can make this happen!

1: Property

The most straightforward way to borrow 100% of the commercial property value is to use existing equity in a property that you own as security for the loan.

Residential property

If you’re looking to finance the purchase of a commercial property or you need finance to kick-start your new venture, you can borrow up to 80% of the property value in equity for the purchase.

However, certain professionals like medical practitioners, veterinarians, dentists, accountants and lawyers can actually borrow up to 90% of the property value in equity.

Commercial property

If you’re already in business and you own your business premises (freehold), you can actually borrow against your property for any working capital or equipment finance that you need.

For standard commercial properties like warehouses, factories and retail shops, you may be able to borrow anywhere up to 70% of the property value in equity.

For specialised or purpose-built properties like farmland, aged care facilities and child care centres, you may be limited to borrowing up to 50-60% of the property value in equity.

In some cases, the bank may not accept it at all.

You can check out our commercial property loan page for the typical Loan to Value Ratios (LVR) available for the different types of real estate that our lenders can finance.

  • Pros: Using your own property as security is the simplest and least complex way to qualify for a 100% commercial loan. The bank will be more likely to go along with it as well!
  • Cons: You will tie up equity in your property that you could potentially use to fund a small business purchase or to buy an investment property.

2: Guarantor

If you don’t want to tie up the equity in your property with a commercial loan, you can either ask your parents, a friend or a business partner to act as guarantor for your loan.

Basically, instead of using your property as security, your guarantor can use their property instead.

How much equity can they put up as security?

Your guarantor can provide up to 80% of their property value as equity or up to 60-70% if they’re using a commercial property.

  • Pros: You can free up your equity and invest it back into the business as cash flow if you ever need extra funds in the coffers.
  • Cons: The guarantor will be liable to pay back your loan should you default on your mortgage repayments. When it comes to commercial property guarantor loans, the guarantor will only be liable to pay back around 20-40% of the loan amount. However, when it comes to business loans (which would otherwise be unsecured), the guarantee will stay in place until the business loan is paid off meaning the guarantor will be liable for the entire loan amount.

3: Business assets

Some lenders will actually do what is known as a balance sheet lend which is basically lending against the value in your business.

The assets that the lender will take as security includes trail books, equipment and vehicles, and even goodwill.

They generally won’t lend against the full value of these assets but will consider a percentage instead.

The bank will generally base the valuation of your business on your last 2 year’s balance sheets.

Trail books and client books

For accounting and legal practices, a couple of our lenders will allow you to borrow up to 60% of the gross fee income of the client books.

For rent rolls, you can also borrow up to 60% of the rent roll purchase price (or based on an independent valuation).

Equipment

If you run a business where you use specific machinery, tools, devices or vehicles on a regular basis, you can actually borrow against the value of these assets in what is known as a buy and leaseback.

How does it work?

Let’s say you bought an earthmover for your engineering business outright and it’s now 2-3 years old.

You can actually sell the asset to the bank and they will then lease it back to you so you can continue using it exclusively for your business.

Essentially, you’re freeing up the capital that’s tied up in the fixed asset which gives you more cash flow for your business.

Just be aware that with this type of equipment finance, you miss out on the depreciation and tax benefits since you’re no longer the owner of the asset.

As a general rule, banks will do a leaseback lend if the equipment or vehicle is no more than 6 years old.

When it comes to equipment like cranes and earthmoving machines, they still hold a lot of value even after this 6-year period which means banks may still consider taking it as a security.

Goodwill

Goodwill is often difficult to calculate but a good accountant will able to do this when it comes time to do your balance sheets.

How much goodwill you can use as equity really depends on the overall strength of the business.

Can I still get a good interest rate?

Yes!

We can help you qualify for the same commercial interest rates as if you borrowing up to 70-80% of the property value.

You can even qualify for the same loan terms.

Call 1300 889 743 or complete our free assessment form today to discover if you qualify for a 100% commercial loan.

  • Steven Regal

    My uncle owns and runs a child care facility. Can I get him to go guarantor on my loan using the facility as security?

  • Hi Steven,

    A child care facility is a specialised commercial property and so it’s rarely accepted as a security property by the banks. Generally, the reason for this is because the value of such types of properties can fluctuate significantly and will require more frequent bank valuations. However, standard commercial properties such as warehouses, shop fronts and retail space are generally acceptable.

    You can call us on 1300 889 743 or check out the commercial property guarantor page to learn more:
    https://www.homeloanexperts.com.au/commercial-property-loan/commercial-property-guarantor-loan/

  • Yash

    Hi

    My dad who lives in India and has his own house and a business. Can I still get him to be a guarantor? Or what are the options for international investor?

    currently looking to lease and run a petrol station. Could be Caltex, shel, Mobil, or bp.

  • Hi Yash,

    Unfortunately the security for the guarantee must be in Australia for you to be able to borrow the full amount. Potentially your dad could borrow in India and then lend this to you. In this situation we’d still need to see your experience with this type of business / that you have business experience in order for us to proceed. Be careful as petrol stations can have contamination issues https://www.homeloanexperts.com.au/commercial-property-loan/petrol-station-loan/

  • Yash

    Hi
    Thank you for your reply. Yes I have a very good experience in service station. Currently I work as a store manager at Caltex servo. And have been in this position for little more than 2 years.

    Also, I am looking to get a service station leasehold business and I believe the underground tanks and pumps are the responsibility of Caltex. But I can always inspect the premises before buying.

    Will you be able to guid me through the process ?

  • Yes we can lend estimate 50% to 70% of the leasehold if it is an existing business and 50% if it is a new business. We’d have to confirm the franchisor (Caltex) was on the acceptable list for the lender we proceed with. Please call us on 1300889743 and ask for one of our commercial brokers

  • Rick Ziggy

    Hi
    I have a new business (clothing retail) which is almost two years running and doing well, turning between 50,000-80,000 in sales per month. I am looking to get a loan to start a business (day spa) and want to buy land/build a facility which will cost approximately 1.5m all up. Forecast revenue will be approx 10,000-15,000 per day. How hard will it be to get a loan for something like this? What will repayments be per month? Or, should I seek investment partners?

  • Hi Rick,
    It would depend on the security that you have available. As a greenfield (new) business you can likely borrow 70% of the cost of the land and construction. The remainder would need to be supported by real estate of some kind due to the size of the loan that you’re seeking.
    We can use the income from your existing business, it will add a lot of strength to your application if you have up to date financials including interim financials for 16/17.

  • Thorpe

    Can I borrow 100% for a leasehold purchase? I owe currently $290k on the $400k property.

  • Well, we can help you go 100% by simply using a residential property as security or if you have a guarantor. Please call 1300 889 743 to speak with an expert commercial mortgage broker.

  • crew

    Can I borrow100% if I have a guarantor even if I’m buying a commercial property as an investment?

  • Yes, you can Crew. Please feel free to check out the commercial investment loan page if you’d like to learn more:
    https://www.homeloanexperts.com.au/commercial-property-loan/commercial-investment-loan/

  • Bernie

    Hi
    Wanting to buy a large Farm on a WIWO basses. Can I borrow against the property and the figures provided by the current owners. So I don’t have to use other investments or house as security. Valued at over $4,000,000

  • Hi Bernie,
    For a $4m farm you can likely borrow 50% – 60% of the value of the property and farm business. So if you want to borrow the full $4m you’d need to provide additional security such as other properties that you own.
    The income to repay the debt can come from the farm business. That’s acceptable.

  • Bel

    I’m looking at purchasing a franchise for about $250k that nets a profit of $110k pa. I own property worth $700k and owe about $370k could I get 100% finance?

  • Hi Bel,
    Yes we can help with this. While it depends on the franchise and your current employment, it should be relatively straightforward.
    I’ll email you and cc one of our business loan experts.

  • Andrew Stevens

    We are a tenant in a building that we have been in for over 15 years and would like to look to purchase the building with the least impact on cash flow.
    Likely price of building would be 1.1-1.3mil. WE would like to borrow 100% and supply additional residential security if required.
    Si this doable?

  • Hi Andrew,
    Yes this is doable. I’ll email you and cc a commercial loan specialist (Shane) in our office. We’ll need a little more info about your business, plans and the building itself to confirm eligibility.
    Good luck! I’m sure you must be eager to have the security and financial benefits of owning your business premises.