A commercial property loan in Australia funds the acquisition, refinance, or development of property used for business purposes — offices, retail premises, industrial sheds, mixed-use buildings, specialised assets like medical or childcare, and the land that sits underneath any of them. The underwriting is materially different to a residential mortgage. So is the pricing, the LVR, the term, and the way the file is decided.
This guide walks through how the commercial loan market actually works in Australia in 2026 — what the major banks will write, what they will not, and where private commercial lenders fit. It is written for borrowers and the brokers who introduce them, not for finance journalists.
What counts as a commercial property loan
A loan is commercial when the security is a commercial property, when the use of funds is commercial, or both. The standard Australian categories are:
- Investment commercial. The borrower owns the building and leases it to a tenant. The lender underwrites the building, the tenant covenant, and the lease tail.
- Owner-occupied commercial. The borrower occupies the building themselves to run their business — for example, a medical practice buying the suite it operates from. The lender underwrites the building and the operating business paying the rent.
- Specialised commercial. Childcare, hotel, service station, pub, accommodation, freezer warehouse — assets with single-use security where re-leasing risk is material. Bank appetite here is narrow.
- Development and construction. Funds to acquire land and build out a commercial asset, often staged across acquisition, DA hold, construction, and stabilisation. See property development finance for the development-specific structure.
How banks underwrite a commercial loan
Major-bank commercial lending in Australia is cashflow-driven. The lender works out the net property income (rent less outgoings) or the borrower's business cashflow, divides it by the proposed loan repayments at an assessment rate, and reads off an interest cover ratio (ICR) or debt service cover ratio (DSCR). Both numbers live in a band — typically 1.5× to 2.0× depending on asset type and tenant strength. Below that band, the loan does not pass serviceability.
On top of the cashflow test, the bank applies a maximum LVR. Standard metro investment commercial caps at 65–70% LVR; specialised assets often at 55–60%; owner-occupied where the borrower has a long trading history can push to 75%. Lease tail (the remaining term on the lease) and tenant covenant strength both move the cap.
Bank terms are typically 1–5 years on a commercial investment loan (sometimes longer for owner-occupied), interest-only or principal & interest, with a refinance or balloon at maturity. Pricing in 2026 sits around 6.5–7.5% per annum for investment-grade files on major bank balance sheets.
Where private commercial lenders fit
Private lenders write the commercial files the banks will not, or will but too slowly. The common reasons banks decline a credible commercial file are:
- Vacant or partially-leased security. The cashflow test fails until a tenant signs. Private lenders can underwrite the value-add story — a 6–18 month bridge to stabilisation, sized against the stabilised value, not the current rent roll.
- Specialised or single-use security. Banks tighten on re-leasing risk; private lenders write tighter LVRs with covenants that recognise the asset class.
- Self-employed or recently-changed borrower. Trading history isn't long enough for the bank's serviceability model, but commercial reality supports the file.
- Timing. The borrower needs to settle in three weeks; the bank credit committee won't meet in time. Private lenders that operate same-team underwriting can decide in days.
Private commercial lenders price wider than the major banks — a stabilised investment file with credible covenants in 2026 sits around 8.99–10.5% per annum, with origination fees of 1–2%. The premium pays for speed, structure, and the willingness to underwrite to the asset story rather than just the bank model.
What to look for in a commercial lender
Three questions matter more than the headline rate:
- Does indicative equal formal? Some lenders quote attractive indicative terms that then drift on formal approval once the credit committee sees the file. The right pattern is the same team underwriting both stages — what the indicative says is what the formal says, with conditions documented up front.
- How is the exit underwritten? A commercial loan without a credible exit is a refinance problem in 12 months. The best lenders underwrite the exit at submission — refinance to a major bank at stabilisation, sale on completion, or re-tenant-then-refinance with the LVR sized to the post-exit value.
- What are the covenants? Interest cover triggers, LVR triggers, valuation refresh schedules, leasing milestones on a vacant building — covenants are the levers the lender uses to manage risk through the term. Tight covenants are usually better than loose ones, because they force conversations early.
How files run at Archer
Archer CommercialX is the product. Investment, owner-occupied, and specialised commercial files, written across Australia, broker-channel only. LVRs to 70% on investment-grade metro, lower on specialised; terms 12–36 months interest-only with a documented exit. Indicative terms come back same-day; the indicative and the formal are signed by the same credit team, so what the indicative says is what settles.
The right next step for a borrower is to speak to a mortgage broker accredited with Archer. The broker will package the file the way the credit team needs to see it — security, sponsor, cashflow, exit — and the indicative will land same business day.