Business and Commercial Loans
Grace Loans specialises in secured business lending using business assets or real estate assets as security for the loan. We don't fund start-ups or businesses without a significant asset to be used as security. Individuals can purchase commercial properties as investments, or purchase a shopfront for your own company or business. We also can lend towards equipment such as trucks, earthmoving and commercial kitchen equipment.
Our commercial loans for commercial zoned premises only go to 70% LVR. Alternatively, you can cash out from your existing property up to 80% LVR. This basically means that you'll need to either have a 30% deposit or plenty of equity available in an existing property.
There's plenty of good and effective ways to fund your business needs:
- Business loans secured by commercial or residential property
- Chattel mortgages for vehicles or equipment
- Leases for vehicles or equipment
- Novated leases for employee vehicles
Business Loan FAQs
For what purposes can I borrow?
The most common scenario is buying a commercial property such as a warehouse or shop, where the real estate provides security for the business loan. You can also borrow for equipment or cars that have a value that is equal to, or exceeds that of your proposed loan. Basically, there needs to be some kind of physical security. A common question is "Can I borrow to purchase a business?" and the answer to that is generally no, as the lender needs to see that the business has been running successfully over 2 years under your leadership. Also, the business itself cannot be security for the loan. The bank will need an easily-sellable asset as security.
If you own a home, you can use that home as security for the commercial loan as long as you have enough equity available. The home would then be refinanced to the commercial lender (you can't have two banks both holding the same house as security for different loans)
What about equipment for my restaurant, cafe or bar?
We can provide finance and leasing for commercial kitchen, coffee and catering equipment including displays and washing equipment.
Rent-Try-Buy is a 12-month rental agreement, allowing you to try equipment in your business before you buy it. Enjoy unrivalled flexibility when it comes to owning and managing your commercial hospitality equipment. Certified used equipment and new equipment are both available to lease.
With Lease-to-Keep you get the equipment you need now, with monthly payments spread over four years. At the end of the term, the equipment is all yours. Simple. Lease-to-Keep is for businesses who have been trading for more than 12 months and are financing over $10,000 worth of equipment.
What is "serviceability"?
Your ability to generate enough income to cover loan payments is described as "serviceability." Each bank has its own way of calculating how much income you need. The interest rate will be higher than present rates in the calculation to allow for rates going up in the future. Credit cards and loans not being refinanced will have payment amounts increased to cover the amount owing as if the facility was fully drawn. That means that if you have a credit card with a very large credit limit it will be harder to qualify for a loan.
Can my business afford a loan?
You'll need to look at your financials and make sure your taxable income shows enough surplus for the proposed loan repayment and living expenses. Start by looking at all liabilities that you and your business own such as a line of credit or a credit card. Work out what the minimum monthly repayment would be, should you fully draw all of those liabilities at the same time and add that to your monthly budget, checking for sufficient surplus to cover the proposed loan repayment and living expenses. If you have sufficient funds in surplus, you are in a good position to send through your information for us to assess more accurately your capacity to borrow.
Is loan interest tax deductible?
We would expect that the interest on your loan should be tax-deductible as long as it relates directly to the operation of your business. Discuss your thoughts with your accountant to find out specifically what, how and when you can claim certain expenses.
What documentation do I need to provide to apply for a loan?
It varies slightly from bank to bank, but for self-employed, partnerships, companies or sole traders it will generally include:
- The last two years of accountant prepared tax returns for all company directors (company tax returns and personal tax returns)
- Profit and loss statements and company financials prepared by your accountant
- Your last Notice of Assessment (Find it at MyGov - ATO)
- Drivers Licence & Passport or Birth Certificate + proof of change of name, if applicable
- The last six months of statements for all business transaction accounts and credit cards
There are 'Low-Doc" loans for self-employed individuals which require less documentation for higher fees. For this you'll need your accountant to write a letter stating that you can afford the proposed loan.
If you are employed PAYG by a company you do not own, you can simply provide the two latest payslips to prove your income.