Buying a premises for your business: commercial loan basics

At some point, many established business owners do the same sum: the rent going to the landlord each month starts to look a lot like a loan repayment that builds someone else's equity. Buying your own premises can be a sound move — but it is a property decision, a business decision, a tax decision and a structuring decision rolled into one, and each piece deserves its own thought. Here is how the owner-occupier journey typically runs, from the rent-versus-buy question through to settlement. This is general information only; the right answer depends on your business, your numbers and advice specific to you.

Rent or buy: the honest ledger

Buying has genuine attractions:

• Control. No landlord, no lease renewals on someone else's terms, no restrictions on fit-out or signage beyond planning rules. For businesses with heavy or specialised fit-outs, security of tenure has real value
• Rent becomes repayments. Money that previously left the business builds equity in an asset instead — and once the loan is repaid, occupancy costs fall sharply
• A second asset. The property can grow in value independently of the business, and can be kept and leased out if the business later moves or is sold

And genuine costs:

• Capital tied up. The deposit and purchase costs are cash the business can no longer use for stock, staff, marketing or opportunities — for a fast-growing business, that trade can be expensive
• Less flexibility. If you outgrow the building in three years, selling or leasing it out is slower than ending a lease
• Concentration. Your business and a large chunk of your wealth end up exposed to the same location and the same property market

Neither column wins by default. Mature businesses with stable space needs tend to get the most from buying; businesses still changing shape often get more from renting. Run the numbers both ways with your accountant before falling in love with a building.

How lenders assess an owner-occupier commercial loan

With a commercial investment property, the lender assesses the lease. With owner-occupied premises there is no lease — so the lender assesses your business: financial statements and tax returns (commonly two years), interim figures, existing commitments, and whether profit comfortably covers the proposed repayments. One factor works in your favour: the rent you currently pay disappears when you own, so lenders can add it back when testing capacity — a business already paying rent similar to the proposed repayments makes an intuitive case.

Expect the usual commercial machinery around that core: director guarantees, a specialist valuation, and scrutiny of the property's suitability and resale prospects. How the assessment mechanics work in detail — valuations, cover ratios, asset types — is covered in our guide to [how lenders assess commercial property loans](/articles/commercial-finance/how-lenders-assess-commercial-property-loans), and the broader landscape in [our commercial property loan guide](/articles/commercial-finance/commercial-property-loans).

Deposits and costs: bring more than resi instincts suggest

Commercial lending is more conservatively geared than residential. In general terms, maximum LVRs are typically lower than for a home loan, there is no LMI to stretch a small deposit further, and specialised properties are capped lower again — so plan for a materially larger deposit than a residential purchase, plus transfer (stamp) duty, legal and due-diligence costs, valuation and lender fees. Loan terms are commonly shorter than the residential 30 years, which lifts repayments for a given amount. Where the numbers land for your purchase depends on the lender, the property and your business — a broker can pre-assess this before you make an offer.

GST and the going concern: flag it early

Commercial purchases are often subject to GST, which changes how much cash you need at settlement — lenders do not automatically finance the GST component, even where a GST-registered buyer can later claim it back. Some transactions qualify as a going concern — broadly, a property sold with a business or tenancy in place under strict conditions — and can be GST-free. Buying premises you will occupy yourself often does not fit that mould, but the treatment depends on the specific transaction. The only safe rule: confirm the GST treatment with your accountant before exchanging contracts, and make sure the contract reflects it.

Which entity buys: company, trust or SMSF

Who signs the contract matters as much as which building you choose, because it shapes asset protection, tax and your exit:

• The trading entity — simple, but the premises sit exposed to the business's trading risks
• A separate company or trust — very common: a holding entity owns the property and leases it to the trading business at market rent, separating the asset from trading risk. This structure has flow-on effects for how the loan is assessed and guaranteed
• An SMSF — self-managed super funds can buy business premises and lease them back to the members' business at market rent, one of the few related-party arrangements superannuation rules permit for business real property. Borrowing inside an SMSF is done through a limited recourse borrowing arrangement (LRBA), which, as at July 2026, remains available under superannuation rules — but the rules are strict, fewer lenders participate, and the compliance obligations are real. This path needs specialist financial, tax and legal advice before you start, not after. Our [SMSF loan guide](/articles/smsf-loans/smsf-loan-guide) covers the mechanics

Decide the entity before you sign the contract — changing the purchaser after exchange can trigger duty consequences.

Fit-out and equipment: keep them off the property loan

A premises purchase often arrives with a second bill: fit-out, machinery, racking, vehicles. Rolling short-life assets into a long property loan is usually poor matching — you can end up paying for a fit-out long after it is replaced. [Asset finance](/loans/asset-finance) funds equipment against the equipment itself, on terms matched to its working life, and keeps your property borrowing capacity intact. If broader working capital is the pressure point, that is a separate conversation again — see our [business loans page](/loans/business-loans).

Settlement: allow commercial timeframes

Commercial deals run slower than residential ones. Valuations are ordered from specialist valuers and commonly take weeks rather than days; credit assessment is more bespoke; and legal due diligence — leases, planning, environmental issues for some sites — takes longer. Six weeks from application to settlement is a sensible planning figure, and complex or specialised properties run longer. Size your finance clause accordingly, get your financials and entity documents ready before you offer, and involve your solicitor and accountant early rather than at the deadline.

Talk it through with a broker

An owner-occupier purchase touches lending, structuring and tax at once, and the lender that suits your industry, entity and property type is rarely obvious from the outside. [Apply online](/apply) or get in touch and we can pre-assess your borrowing position before you start inspecting buildings — it makes every later step easier.