Bad Credit Commercial Finance Australia: Options for Business Owners

Quick Answer: Commercial finance with bad credit in Australia is available through specialist and non-conforming lenders — but at significantly higher rates and with stricter LVR requirements (typically 60–70% for commercial property). If personal credit defaults were listed unlawfully under the Privacy Act 1988, professional removal in 30–90 days can unlock mainstream commercial lending at rates that fundamentally change the business case.

Commercial finance covers a wide territory — commercial property purchase, equipment finance, fitout loans, working capital, development finance. The common factor for business owners with bad credit is the same: your personal credit file is assessed alongside the business financials, and an active default creates a barrier.

This guide covers what commercial lenders actually assess, your realistic options with bad credit, and the most cost-effective path forward.

How Commercial Lenders Assess Bad Credit Applications

For commercial finance up to approximately $5M, most lenders require personal credit checks on all directors. This is because small-to-medium business lending is ultimately backed by the personal covenant of the business owner. A director's personal defaults are viewed as a direct indicator of financial management capacity.

Commercial Finance Rate Comparison With Bad Credit

The gap between mainstream and bad-credit commercial rates on a $1M commercial property loan over 15 years is substantial — often $400,000+ in additional interest.

Real Case Study: Michael, Sydney — Commercial Purchase Held Pending 68-Day Credit Repair

Michael, 47, a dentist from Sydney, had identified a commercial property to purchase for his practice. His personal Equifax score was 478 due to two defaults: a $1,340 health fund default from a disputed premium increase, and a $680 telco default from an account cancelled during a move.

His commercial property lender had declined the loan application. A specialist commercial lender had offered finance at 11.4% p.a. on the $1.1M commercial property.

The vendor agreed to a 90-day settlement. Michael contacted ACS.

His assessment found both defaults had removal grounds: the health fund had listed during an active Private Health Insurance Ombudsman complaint (Credit Reporting Code breach), and the telco had failed to issue a Section 21D notice.

Both challenges ran simultaneously. Health fund default removed on day 44. Telco default removed on day 68. Michael's Equifax score moved from 478 to 703.

His commercial broker secured approval through a second-tier lender at 7.6% p.a.

Result: Michael's Equifax score moved from 478 to 703 in 68 days. On $1.1M over 15 years, the difference between 11.4% and 7.6% p.a. represented approximately $318,000 in interest savings. He paid only when we succeeded. Subject to individual assessment; results may vary.

Options for Commercial Finance With Active Bad Credit

Option 1: Fix the personal credit file first If any personal defaults have legal removal grounds under the Privacy Act 1988, a 30–90 day repair window is almost always worthwhile on commercial transactions — the interest saving over a commercial loan term easily justifies the time.

Option 2: Specialist commercial lender Lenders like Thinktank, Liberty Financial, and La Trobe Financial offer commercial products for impaired credit borrowers. They assess the whole picture: property quality, business strength, rental income, and business financials — not just credit score. Rates are higher, LVR caps are lower (often 60–70% for commercial property).

Option 3: Debtor / invoice finance If the commercial need is working capital rather than property purchase, invoice finance bypasses personal credit concerns by using outstanding invoices as security. Revenue-based assessment is more forgiving of personal credit history.

Option 4: Increase your deposit / equity position A larger deposit reduces lender risk and can sometimes offset credit concerns — particularly with specialist lenders who have more discretionary assessment capacity. If you can increase to 40% deposit on a commercial property, options widen.

Frequently Asked Questions

Can I get a commercial loan in Australia with a personal default? Yes — through specialist and non-conforming commercial lenders who assess beyond the credit score. Major banks will typically auto-decline with an active personal default. The trade-off is higher rates and lower LVR limits. If the default was listed unlawfully, professional removal in 30–90 days and reapplying through mainstream commercial lenders at significantly better rates is almost always the better financial decision.

Do commercial lenders check personal credit in Australia? Yes — for small-to-medium business commercial lending, all directors' personal credit files are assessed. This is standard practice because personal guarantees are typically required on commercial loans. Only for very large transactions secured by substantial business assets is personal credit occasionally deprioritised.

What LVR do commercial lenders accept with bad credit in Australia? Specialist commercial lenders with impaired credit typically offer 60–70% LVR — meaning you need a 30–40% deposit. Mainstream lenders with clean credit will consider up to 80% LVR for established commercial properties. Development finance is more conservative — often 65% LVR for clean credit, lower for impaired.

How long does it take to get commercial finance approved with bad credit? With a specialist commercial lender, approval timelines are typically 4–8 weeks due to more complex assessment. If pursuing credit repair first, add 30–90 days for the repair process. Most commercial property contracts allow sufficient settlement time for this approach to be viable.

Can bad credit affect my ability to get trade credit from suppliers? Yes — some suppliers and trade creditors run credit checks before extending business terms. A personal default appearing on your file can affect payment terms offered by suppliers, particularly in industries where credit checking is standard (construction materials, wholesale). Fixing the personal file improves business relationships as well as formal lending access.

Understand Your Options Before You Commit to a Rate

A free assessment from Australian Credit Solutions takes 24 hours and identifies whether any personal defaults have legal removal grounds under the Privacy Act 1988. On commercial transactions, the interest saving from mainstream rates versus specialist rates often runs into hundreds of thousands.

Australian Credit Solutions is ASIC-licensed (ACL 532003), lawyer-led by Principal Solicitor Elisa Rothschild, and has helped over 5,000 Australians clear their credit files since 2014. No Win No Fee. 98% success rate on accepted cases.

Get My Free Assessment → 📞 0489 265 737 🛡️ ASIC Licensed ACL 532003 | ⭐ 4.9/5 from 976+ Reviews | 🏆 Award Winner 2022–2024

Australian Credit Solutions Pty Ltd holds Australian Credit Licence ACL 532003. Credit repair services are subject to individual assessment. Results may vary. This article provides general information only and does not constitute legal or financial advice.

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