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Australian Commercial Property Loans: Types and Key Approval Metrics
Learn about Australian commercial property loan types, including commercial property loans and development loans, and key metrics like LVR and debt service coverage.
Editorial · August 14, 2026
Understanding Commercial Property Loans in Australia
Commercial property loans in Australia generally fall into two main categories: commercial property loans and development loans. Each serves a different purpose and comes with its own risk profile.
- Commercial property loans are typically used to purchase or refinance an existing commercial property, such as an office building, retail shop, or industrial facility.
- Development loans are designed for property development projects, covering costs like land acquisition, construction, and other development expenses.
Choosing the right type depends on your project and financial situation.
Key Metrics Lenders Evaluate
When you apply for a commercial property loan, lenders assess several critical financial indicators. Two of the most important are:
- Loan-to-Value Ratio (LVR): This ratio compares the loan amount to the property’s value. A lower LVR often indicates lower risk to the lender, which may affect your borrowing capacity and interest rates.
- Debt Service Coverage Ratio (DSCR): This measures your ability to repay the loan from the income generated by the property. It is calculated by dividing the property’s net operating income by the total debt service. A higher DSCR suggests stronger cash flow and better repayment ability.
Understanding these metrics can help you prepare a stronger application and set realistic expectations.