First Federal Extends Business Loan Terms to 40 Years — What Australian SME Borrowers Need to Know About Commercial Property Finance

Key takeaway: First Federal's move to offer 40-year business loan terms secured by commercial property marks a significant shift in SME finance — longer terms mean lower monthly repayments, but borrowers should weigh total interest costs carefully before committing.

Why 40-Year Business Loan Terms Are a Big Deal for SME Owners

Standard commercial loans in Australia typically run for 15 to 25 years, with banks often imposing shorter terms on self-employed borrowers who cannot demonstrate consistent income through traditional documents. First Federal's decision to extend terms to 40 years — broadly in line with the longest residential home loan terms available — could meaningfully reduce monthly repayments for small business owners purchasing or refinancing commercial property.

For a $1 million commercial loan, extending from 25 to 40 years at the same interest rate can reduce monthly repayments by roughly 20 to 25 per cent, freeing cash flow for operations and growth. That margin matters most when the RBA cash rate sits at 4.85% — an 18-year high — and businesses are absorbing rising operational costs across the board.

"Commercial property now accepted as security for SME borrowers, stretching terms to 40 years represents a meaningful shift in how non-bank lenders approach business finance in Australia." — Australian Broker, 5 November 2026

Commercial Property as Security: Unlocking Equity for SME Borrowers

Accepting commercial property as loan security opens another door for small business owners: the ability to leverage existing commercial holdings — a shopfront, warehouse, or office — to access working capital or fund expansion without selling the asset.

Traditionally, banks have been cautious about accepting commercial property as security, particularly for smaller businesses or those operating under alt doc income verification. Non-bank lenders are more flexible in assessing commercial property valuations and accepting diverse property types as collateral.

For self-employed business owners who own their premises outright or have significant equity in commercial property, this change could unlock financing options that were previously unavailable through the major banks.

How Non-Bank Commercial Lenders Differ From Banks

Non-bank lenders assess commercial loan applications differently from the major banks. Rather than relying solely on two years of full tax returns, they can consider:

• Business Activity Statements (BAS) as income evidence
• Accountant's letters confirming business income
• Asset-backed lending with less emphasis on income verification
• Flexible loan terms tailored to individual business cash-flow cycles

This matters most for self-employed borrowers, sole traders, and small business owners who operate lean structures and may not show high income on paper despite strong underlying revenue. With Australia's unemployment rate at 4.7% (ABS, September 2026) and GDP growing just 0.4% in the June quarter, maintaining cash flow is a priority for many small businesses.

What This Means for MPFG Borrowers

For small business owners considering commercial property finance, the expansion of non-bank terms is a positive development. MPFG Capital's commercial loan products are designed for exactly the borrowers banks often turn away: self-employed operators, those with complex income structures, and business owners seeking flexible terms.

If your income documentation does not fit the standard bank template, or if you need longer repayment terms to protect your monthly cash flow, speaking with a non-bank lending specialist is a sensible first step.

FAQ

Can a self-employed borrower get a long-term commercial loan in Australia?

Yes. Some non-bank lenders are now offering commercial loan terms significantly longer than the typical bank product — up to 40 years in some cases. Approval depends on the borrower's income documentation type, the commercial property being used as security, and the lender's specific credit criteria. Consulting a non-bank specialist is advisable before applying.

What types of commercial property can be used as loan security in Australia?

Most non-bank lenders accept retail shops, offices, warehouses, and industrial premises as commercial security. Mixed-use properties and certain development sites may also qualify subject to independent valuation and lender assessment. Banks are typically more restrictive in the property types they accept.

How does commercial lending differ for self-employed borrowers in Australia?

Self-employed borrowers frequently find that standard bank commercial loan criteria are difficult to meet without two full years of tax returns showing consistent profit. Non-bank lenders offer alternative documentation pathways — using BAS statements, accountant letters, or asset-backed assessment — making approval more accessible for business owners with complex income structures.

This article is general information only and does not constitute financial or credit advice. All applications are subject to credit assessment by MPFG Capital (ACL 553698).