Commercial property loans

A commercial property loan is any borrowing secured on property used for business, such as offices, shops, industrial units, hotels or mixed-use buildings. It can fund a purchase, refinance existing debt or release equity. Most are long-term commercial mortgages, but short-term and development loans are also secured on commercial property.

Most commercial property lending is unregulated business lending (FCA Handbook PERG 4.4, accessed 20 Oct 2026). The exception is where part of the property is a home lived in by the borrower or a close family member, when different rules can apply. Lenders confirm which rules apply before an application goes ahead, and the documents differ as a result.

The main types are long-term commercial mortgages, shorter commercial term loans, bridging loans and development finance. A commercial mortgage usually runs for a longer term and is repaid monthly. Bridging loans fund a purchase or refinance for months rather than years, and development finance funds building or conversion work in stages.

Choosing between them depends on how long the money is needed and how it will be repaid. A purchase that needs works before it can be let is often bridged first and refinanced onto a longer loan once the work is done and income is in place. Short-term options are explained in the bridging loans section.

Some borrowers also use secured business loans, where the property is security for borrowing used in the business rather than to buy the property itself. These are usually shorter and priced differently from a commercial mortgage.

Commercial property loans are made to individuals, partnerships, limited companies, trusts and pension schemes such as a SSAS or SIPP. Many are taken by limited companies, with personal guarantees from the directors. Lenders look at the borrower's experience, credit history, assets and other borrowing, and want a clear plan for the property.

Owner-occupiers, who trade from the property, are assessed mainly on the business. Investors, who let the property, are assessed mainly on the lease and the tenant. Some borrowers do both, for example a business that occupies one floor and lets the others, and lenders then look at each part of the income separately.

Lenders instruct a commercial valuation and check the property's condition, location, use class and how easily it could be sold or relet. They review trading accounts or the lease and tenant, the borrower's credit history and the source of the deposit. Legal due diligence covers title, planning and any lease terms before the offer becomes final.

The amount a lender will offer depends on the loan-to-value and on income cover. For let property, lenders test that rent covers interest by a margin they set. For owner-occupied property, they look at profit and cash flow. How these tests feed into pricing is set out on the commercial mortgage rates page.

Lenders may also ask for a business plan, management accounts, details of other properties owned and evidence of how the property will be insured and maintained during the term.

Commercial property loans differ on loan-to-value, term, fixed or variable pricing, fees, early repayment terms and the conditions written into the offer. Comparing on the total cost over the time the loan is likely to be held, rather than the headline rate, gives the fairest view of which option suits a particular purchase.

Conditions can matter as much as price. Some offers include covenants, such as a minimum income cover or a maximum loan-to-value, that are checked during the term. A breach can lead the lender to change the terms or ask for part of the loan back, so it helps to understand them before signing.

A broker who arranges commercial lending regularly can compare several lenders on one case. The commercial mortgage brokers page lists firms that arrange commercial property finance.