A commercial property loan sounds straightforward until you start comparing offers and realise banks are not really underwriting a condo with a company name on it. They are looking at business use, lease tenure, rental profile, company cash flow, and whether the property is helping operations or sitting there as an investment.
Commercial property loans in Singapore are not just bigger home loans
A commercial property loan sounds straightforward until you start comparing offers and realise banks are not really underwriting a condo with a company name on it. They are looking at business use, lease tenure, rental profile, company cash flow, and whether the property is helping operations or sitting there as an investment.
That difference affects almost everything, from loan to value, to how repayment gets assessed, to whether a bank is comfortable stretching the tenure. If you are buying an office, warehouse, factory or shophouse for your business, the financing route matters as much as the property itself.
What banks usually lend on a business property loan
For most Singapore borrowers, a business property loan will land somewhere around 70% to 80% loan to value, usually based on the lower of purchase price or valuation. On a S$2 million warehouse, that means a typical loan quantum of S$1.4 million to S$1.6 million, leaving S$400,000 to S$600,000 in cash before fees.
UOB commercial property loan packages can go up to 80% financing on that basis. CIMB also advertises up to 80% LTV, with tenure stretching as far as 30 years in some cases. OCBC sits in a similar band for standard commercial mortgages, although it may push total financing higher through bundled facilities tied to working capital.
Owner occupied properties usually get the warmer reception. Where the company is actually using the premises, some lenders may go as high as 90% LTV. A tenanted investment asset is commonly capped at 80% or below, which is usually when buyers discover the "same property, different purpose" issue is not a small detail.
Rates, tenure, and the cash requirement people underestimate
Commercial property loan pricing in Singapore usually falls around 3% to 5% per year. You will still see promotional fixed rates advertised much lower, sometimes around 1.08% per year, which is exactly when I start checking how long the rate lasts and what happens after the promo window closes.
Tenure often runs up to 25 to 30 years, but industrial land can be less forgiving. For JTC properties, the remaining lease can sharply limit financing tenure, and a 10 year cap may apply in loan calculations. That can turn a manageable monthly repayment into something much heavier, especially on larger factory or warehouse purchases.
The other unpleasant surprise is the downpayment structure. CPF cannot be used for commercial or industrial property, so the equity portion is cash. On that same S$2 million property at 80% LTV, S$400,000 must come from cash reserves, not your OA balance.
How this differs from an investment mortgage
Commercial loans do not follow the same framework as residential borrowing. There is no MSR for commercial property loans, which helps, but TDSR still applies at 55%. Depending on the structure, banks may assess the company’s income and repayment ability rather than relying only on the director’s personal salary.
That sounds more flexible, and often it is, especially for established SMEs with clean accounts. A logistics company with stable receivables may qualify more comfortably on a warehouse purchase than a salaried individual buying a second property. The catch is that banks will want proper financials, ACRA records, existing debt details, and usually a clearer story on business use than they would for a plain investment mortgage.
Shophouses add another wrinkle. If an HDB shophouse includes a residential component, the residential portion may face a 15% LTV cap, so the deal can end up being assessed in pieces rather than as one simple commercial purchase.
When a commercial land loan becomes its own problem
A commercial land loan is not just a property loan with less building on it. Land financing tends to be more conservative because the exit is less obvious, development risk is higher, and lease conditions matter more.
That issue shows up often with industrial land. JTC adjusted parts of the industrial land lease framework in 2024, including an extra three years on new greenfield allocations to cover development periods. Helpful, yes, but it does not change the basic financing reality that shorter usable tenure usually means tighter loan terms.
Buy the property, or use property as security for working capital?
This is where many SME owners get pulled into the wrong conversation. If your real need is stock financing, payroll buffer, or bridging receivables, buying a property may be the expensive answer to an operating problem.
Property backed SME loans are a separate category. GXS Bank, working with Funding Societies, launched a secured SME facility of up to S$2 million using residential or commercial property as collateral. Licensed lenders in Singapore may go up to S$4 million on property backed working capital loans, with rates from 0.6% per month, which is 7.2% a year before you even get into fees and structure.
For most Singapore SMEs, the better question is whether the property is core to operations. If yes, a commercial property loan or business property loan from a bank can make sense. If not, pledging property to support working capital may be cleaner than locking the business into a large real estate purchase just because financing is available.
Compare property-backed SME loans
Compare Business Loans