When business owners start thinking about retirement, the conversation often changes. It stops being about “How do I grow the business?” and starts being about “How do I build wealth outside of it?”
That was exactly the position one of our clients was in.
He had built a successful business and held significant equity. On paper, he was in a great position. But his next goal wasn’t more growth inside the business. It was about creating a passive income stream and diversifying his wealth into commercial property.
There was just one problem: his personal income didn’t fit neatly into the boxes most traditional lenders expect to see.
Trying to force the deal through a major bank using tax returns, financial statements, and serviceability calculators would have been slow, complicated, and likely unsuccessful.
Rather than bending the numbers to fit a standard bank model, we took a different approach.
The Strategy: Lease-Doc Commercial Lending
Instead of relying on the borrower’s personal financials, we structured the deal using a lease-doc commercial facility. This is one of several lending solutions we provide for business owners with complex financial structures.
Lease-doc lending assesses the deal primarily on the strength of the property and the lease income, rather than on personal or business financials.
In practice, that meant:
- No tax returns
- No financial statements
- No bank statements
Instead, the lender looked at:
- The quality of the commercial property
- The lease terms
- The tenant profile
- The rental income
- The overall risk profile of the asset
This approach allowed our client to secure a high-quality commercial property with an interest-only loan at just over 6% per annum.
Why This Approach Worked
There were three main advantages to structuring the deal this way:
1. Reduced Friction
We didn’t need to jump through hoops to “prove” income with documents that didn’t reflect his true financial position. The property stood on its own merits, making the process cleaner, faster, and far less stressful.
2. A Passive Income Stream for Retirement
The property delivered stable rental income supported by a lease, perfectly aligned with his long-term retirement plans. Rather than leaving all wealth tied up in the business, he now had a tangible, income-producing asset outside of it.
3. Future Borrowing Power Stayed Intact
Because lease-doc facilities are assessed on the property itself, this loan did not reduce his residential borrowing capacity. He could still pursue future investment property opportunities without this purchase becoming a roadblock.
The Bigger Lesson for Business Owners
This deal succeeded not because of a clever rate or a special promotion, but because the structure matched the client’s reality.
Finance for business owners is rarely straightforward. Cash flows can be uneven, income structures vary, and traditional lending rules don’t always reflect how successful businesses operate.
But complexity doesn’t mean your options are limited. With the right strategy and the right lender, deals that look challenging on paper can become achievable.
Final Thoughts
If you’re a business owner thinking about:
- Building passive income for retirement
- Investing in commercial property
- Diversifying wealth outside your business
- Buying assets without affecting future borrowing power
…a standard lending approach might not be your best option.
Sometimes the smartest decision isn’t forcing your situation into a traditional model, it’s finding a solution that aligns with your circumstances. The right finance structure can make all the difference.
Want to Explore Commercial Lending Options?
For guidance on commercial property lending or structuring finance to suit your business, contact Harrison directly at [email protected] or send a message via the website.