Commercial Loan for Commercial Buildings

We have a loan that is up for renewal in 2019.

They loans were a trading company guarantee for property owned by the directors in the directors name. [Loan doesn't seem to be on their credit file?!? unlike a personal residential property]

I noted on the projections that the net profit back then was only $150K for a 2.2m loan.

The security was 50% though, now the valuations are $4.4m for all secured properties.

My concern is, when we go to renew the loan, how do commercial loans work? I know they're not as tight as residential loans are now. Would kind of netprofit would be required for a 2.2m loan.

 

Considered the Div7A issues?

 

Directors get paid through company and pay the interest for the building themselves. So not an issue.

The bank gives the loan based on revenue/profitability of the company as it's a commercial loan.

 

It could be a huge issue

 

? Trading company doesn't give a loan to the directors, how could there be Div 7A issues?

Trading company directors of which are not all the same as the building owners, pays rent to the landlords, two of the directors of which only one of them owns the trading company. Directors receive a wage from the company, less payg - so how is that a loan? Landlords gets rent from the trading entity for using the premises. I'm not sure how there are Div 7A issues here?

The question was how does commercial funding work, as I know it's not primarily based on serviceability and doesn't fall into apra.

 

Think about it.

 

Commercial loan is focusing on servicing then the security.
However, servicing can be proven in many ways.

some secondary/private fund may not look at servicing at all. some lenders purely looking at security itself.

Hence, I guess to answer your questions, in some aspects, commercial loan is much easier to obtain, servicing is depending on what's on your financial and tax return.....etc