4 Ways A Commercial Property Loan Can Help Your Entrepreneurial Journey

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As your business grows, you’ll eventually run out of space. Whether it’s because you’re handling more sales, hired more staff, purchased bulky equipment, or simply need a bigger space to operate.

Whether you’re running your business from home or renting out a small commercial space, you’ll find that it’s more effective to purchase a commercial property you can call your own. Even if you don’t have the money to pay upfront for a commercial property, you have the option to take out a commercial property loan.

What’s A Commercial Property Loan?

Similar to taking out a home mortgage, business owners can also take out a mortgage or real estate loan when buying commercial property. 

A commercial mortgage helps business owners finance the purchase or renovation of a commercial property such as hotels, apartment buildings, office buildings, shopping, and retail centres, restaurants, and industrial buildings. 

The money can be borrowed from a specialist lender or a high street bank and is repaid in monthly instalments and interest.

In general, a commercial property loan requires the buyer to occupy the property. This means that at least 51% of the business should physically reside in the building. Otherwise, borrowers are advised to take a look at investment property loans instead. 

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The Advantages Of Commercial Property Loan

Here are some of the advantages of a commercial property loan you should know:

  • Better Than Traditional Business Loans

Commercial property loan starts where traditional commercial loans end. In order to borrow a substantial amount, you’ll often need to secure the loan against something in order to offset lender risk. 

Meanwhile, owning a commercial property means that you’ll have a valuable asset and can even get a property refinance for your next project. And a valuable business asset means you can borrow more without the need to give up a proportion of your business shares. This allows you to stay in charge for the long term. 

In addition, when compared to other types of commercial loans like unsecured commercial loans, commercial property loans tend to be more favourable in terms of interest rates. 

As with any standard mortgage, you’ll have to pay interest. However, the interest for a commercial property loan is tax-deductible. This means that you can offset the cost against any tax liabilities. 

  • Don’t Waste Money On Rents

Renting a property— both for commercial and residential purposes— is seen as “dead money”. 

Instead of paying off an outstanding amount and taking ownership of a property, renting commercial property simply means you’re just handing over money to a landlord. 

Renting a commercial property suits a lot of situations, especially for start-ups. However, purchasing your own business property will give you something to show for all your monthly payments. 

  • Achieve More Control

Taking out a commercial mortgage to buy your own business property can give you more control over the building and its use. 

You can renovate and alter areas on your own terms. This means you’re free to invest in the ambitious premise designs that your business requires. You don’t have to ask permission to display signage or paint the walls to your brand colours. And no landlords can force you to produce the funds for expensive upkeep.

Also, it helps you avoid any rent increases or expensive management fees. This can provide you with greater stability in your finances. Take note, however, that you’ll be liable for other building costs such as renovations and wear and tear. 

  • Cheap But Have Significant Capital Gains

Due to the pandemic, the price for commercial real estate assets has been falling down. This means that commercial properties and commercial property loans are currently cheap. 

And yet, with the health protocols and restriction loosening and businesses starting to open up shop once again, commercial real estate prices are expected to rise once again. 

If you take out a commercial property loan now, you can earn significant capital gains in the coming years. This could provide you with a lump sum when selling the property in the future.

Not only that but owning a commercial property through commercial mortgage also means great rental potential. Subject to the agreement of your property loan provider, any extra space (offices, storage space, car parking space, or any spare room) of the commercial property you own can be used to generate useful extra revenue that you can use to scale or grow business operations. 


When it’s time to expand or set up a new business facility, a commercial property loan can help finance your purchase of a bigger premise. It has a lot of benefits that appeal to business owners, ultimately pushing your business towards growth and success.

Written by Julie Hanson

Julie is passionate about property – development, investment and portfolio planning. Along with husband Alec, Julie is actively building a property portfolio while helping others to do the same.

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