Preserving Your Business Banking Relationship During Property Investment 

Introduction 

For business owners looking to invest in commercial property, the prospect of changing banks can be a significant concern. However, there are avenues to obtain a commercial loan without the need to switch business banking. This guide explores the circumstances under which this is possible, considerations for property specialization, and the rationale behind banks’ preferences. 

1. Qualifying for a Loan Without Switching Banking 

Understanding Eligibility Criteria 

Residential or Commercial Property: 

• Borrowing against a property with no unsecured portion. 
• This provides flexibility in maintaining your existing business banking relationship. 

Loan Amount: 

• Borrowing less than $1 million. 
• Some lenders offer this option for smaller loan amounts. 

Annual Review Exemption: 

• Opting for a commercial loan with no annual reviews. 
• Typically applicable to non-specialized commercial properties. 

2. Specialized vs. Non-Specialized Commercial Properties 

Determining Property Market Appeal 

Preferred Commercial Properties: 

• Offices, warehouses, factories, retail spaces, residential blocks of units. 
• These have a broad market appeal and are easier to sell in case of default. 

Non-Standard or Specialized Properties: 

• Child care centers, hotels, pubs, restaurants, petrol stations. 
• Considered riskier due to limited market appeal, making banks cautious. 

Lender Variability: 

• Each bank has unique lending policies and appetites. 
• Some may be more open to specialized properties without banking switches. 

3. Seeking Professional Advice 

Navigating Lender Policies and Choices 

Policy Variability: 

• Lenders may have specific requirements based on property type and loan amount. 
• Specialist mortgage brokers can help find suitable lenders. 

Maintaining Business Banking: 

• Decision may depend on the nature of the business. 
• Consider bundling finance for potential benefits. 

4. Benefits of Maintaining Existing Business Banking 

Considerations Beyond Disruptions 

Optimal Deal Bundling: 

• May get better deals by consolidating all business finance needs. 
• Evaluate benefits of bundling with current bank versus seeking specific finance types elsewhere. 

Individual Banking Strengths: 

• Some banks excel in certain finance types (e.g., agrifinance, vehicle finance). 
• Consider specialization when deciding on maintaining business banking. 

Transactional Banking Needs: 

• Many SMEs prefer keeping their current bank for transactional needs. 
• Includes cash management, cross-border payments, and payment processing. 

5. Understanding Banks’ Perspectives 

Risk Aversion and Customer “Stickiness” 

Risk-Averse Nature: 

• Banks are cautious, especially with specialized properties and unique locations. 
• Limited market appeal may lead to higher deposit requirements and interest rates. 

Customer “Stickiness”: 

• Banks encourage bringing business banking to enhance client loyalty. 
• Long-term relationships benefit banks and borrowers. 

Conclusion: Navigating Commercial Loans Strategically 

In the realm of commercial property investment, obtaining a loan without changing banks is feasible under certain conditions. Understanding the nuances of property specialization, lender policies, and the benefits of maintaining existing business banking relationships empowers business owners to make informed decisions. Seeking professional advice and exploring lender options tailored to specific needs contribute to a strategic and efficient approach to commercial financing.