Summary of Commercial Loan Products

For business operators that are new to finance, possibly considering their first business loan, it can be a challenge to get your head around the different types of commercial loan products available. For even the most savvy long-term business person, navigating and negotiating your way to a workable business finance solution can be a challenge.

We’re simplifying the descriptions as much as possible to explain how each loan product is structured and highlight the differences and similarities across the range so you can assess the benefits of each to your business.

The range of commercial loan products include:

  • Chattel Mortgage: the most commonly used finance facility as it suits the many businesses that use a cash accounting method. For detailed product explainer READ MORE
  • Rent to Own: an off-balance sheet finance type. For detailed product explainer READ MORE
  • Commercial Hire Purchase (CHP): a versatile finance product suited to many businesses for many types of purchases. For detailed product explainer READ MORE

Key Differences

The big question for businesses is which finance product is best suited to their business and the particular equipment or car they are purchasing.

We highlight where the differences are to assist:

  • Accounting method: CHP and Chattel Mortgage suit a cash accounting method, Rent to Own suits accruals accounting method.
  • GST: differences exist as to which elements of the loan, especially repayments, are subject to GST. If applicable, when the GST is payable and can be claimed.
  • Tax deductions: differences exist as to which elements of the loan, ie repayments and interest, are tax deductible.
  • Ownership during the term of the loan: differences exist as to whether the lender or borrower retains ownership in title of the asset during the term of the loan period. Ownership title does not preclude the borrower from having full use of the asset during the loan period.

It is strongly advised that you consult with your accountant or financial advisor to decide which product is best suited for your business.

Key Similarities

While there are fundamental differences in the structure of the business loans, there are quite a few similarities in the basic elements.

They include:-

  • Interest rate is usually fixed.
  • The loan term is fixed for a set number of years/months.
  • The monthly repayments are set at a fixed amount for the loan term.

Some elements are subject to individual lender guidelines and some dependent on individual loan applications.


  • Most of the loan products are suited to most types of business asset purchases including a wide range of equipment, motor vehicles, marine vessels and trucks.
  • Suited for both new and used equipment and vehicles subject to individual lender guidelines.
  • Different loan products may suit businesses at different stages or cycles of their operation.

Sourcing Business Finance

The objective in sourcing any type of business finance is to achieve the lowest interest rate possible and a repayment amount that works with your cash flow. Your loan must be workable for your business. In some instances, that may require deft negotiation skills when discussing what you want with a bank or lender that has strict guidelines that they are instructed to follow.

To ease the burden of time and hassle in sourcing business finance, many business engage the services of a finance broker to arrange their business loans. The most effective brokers are independent, highly experienced in negotiating business loans, have a large lender panel of banks and finance providers to source loans and are committed to working solely in the interests of their clients.

We know people who operate in the finance broking area and we welcome your enquiry for further information or contact details to assist you.