Commercial loan

Two loans can look identical on paper, same amount, same security, same lender, and still be treated as different products under Australian law. It all turns on one thing: where will the money go? If the answer is the business, it’s a commercial loan.

What counts as a commercial loan?

ASIC describes commercial loans as finance for companies or business owners to run a business or buy goods and services for it, such as supplies, machinery or premises. Typical examples:

• a business term loan to fund a fit-out or expansion;
• an overdraft or line of credit for working capital;
• equipment and vehicle finance;
• a loan to buy a factory, shop or office;
• short-term property-secured funding to clear a tax bill.

Company, trust, partnership or sole trader: the structure doesn’t change the label. Purpose does. A plumber borrowing personally to buy a van for jobs has a commercial loan. The same plumber borrowing to renovate their own kitchen does not.

How commercial loans differ from consumer loans

	Commercial loan	Consumer loan
Purpose	Business or investment (other than residential property)	Personal, domestic or household, or residential investment
Main rules	General law, the ASIC Act and the contract	National consumer credit law, including responsible lending
Assessment	Business cash flow, security, trading history	Personal income and living expenses
Documents	Can be full doc, low doc or turnover-based	Detailed income and expense checks
Dispute options	AFCA, but only where the lender has joined	Lender must hold a credit licence and belong to AFCA

ASIC itself says commercial borrowers get the lowest level of legal protection. There are still safeguards. The ASIC Act bans misleading and unconscionable conduct and lets a court strike out unfair terms in a small business’s standard form contract. But many of the checks a home buyer takes for granted simply don’t apply.

The upside is flexibility. Without consumer rules dictating the process, lenders can approve on bank statements, lend against property quickly or tailor repayments to seasonal income. That’s why non-bank and private lenders can sometimes help where a bank says no.

Need business funding but not sure which kind? Start a quick enquiry and we’ll sort through it with you.

The business purpose declaration

Before settlement, most lenders want a signed statement confirming the money will mainly be used in the business. Take it seriously. It is how the lender documents that the loan sits outside consumer law, and signing a false one can leave you without protections you would otherwise have had. If part of the money is going on something personal, say so upfront.

An example

A Ballarat café owner wants $90k: $70k for a new coffee machine and counter and $20k to repaint and refurbish the dining area. All of it is for the café, so it’s a commercial loan. The lender looks at half a year of the café’s account history plus its most recent BAS, and the owner signs a business purpose declaration. If the owner had also wanted $15k for a family holiday, that portion would need to be dealt with separately. (Illustrative only.)

Related terms

Most commercial loans are a term loan, a revolving facility or asset finance. Your obligations sit in the loan agreement, and each lender’s credit policy decides whether you qualify. To see what repayments might look like, try the business loan repayment calculator.

Got a business purpose in mind?

Start with the job the money has to do, and we’ll work backwards to the loans that suit it. The form is a handful of questions and takes roughly as long as boiling a kettle, and filling it in leaves your credit report untouched. We don’t hand your enquiry around the industry. Someone on our team reads it properly and gives you a call. The more honest and exact you are about turnover, existing debts and purpose, the better our first suggestion will be.

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