SMSF Commercial Borrowing Calculator

How SMSF commercial borrowing works

An SMSF cannot directly borrow to buy property — it must use a Limited Recourse Borrowing Arrangement (LBA). The property is held in a bare trust (a holding trust), with the SMSF as beneficial owner. The lender's recourse is limited to that single asset; if the loan defaults, the lender cannot pursue other SMSF assets. This structure is more complex than a standard commercial loan and the lender panel for it is narrower.

The two binding constraints

Max loan = MIN ( LVR-capped loan , Serviceability-capped loan )

LVR cap: Loan ≤ 70% × property value (sometimes 75–80% for prime BRP). Equity required from the SMSF = property value × (1 − LVR) + stamp duty + setup costs + liquidity buffer.

Serviceability cap: Net rent + contributions must service the loan at the lender's assessment rate with a 1.30–1.50× ICR buffer. If contributions are inconsistent or close to caps, lenders may discount them in serviceability.

The binding constraint depends on your fund balance and your asset's yield. A well-funded SMSF buying a low-yielding asset is usually serviceability-constrained; a smaller SMSF buying a strong-yielding asset is usually deposit-constrained.

Practical scenarios

Buy your own business premises

Two-director SMSF with $550k cash. Operating business pays $95k/year market rent. Concessional contributions of $50k/year between members. At 70% LVR and 7.75% assessment rate, the indicative purchase capacity is around $1.3–1.4M, funding a $900–950k loan. Stamp duty (~$70k), $15k setup, $130k post-settlement liquidity buffer are all funded from the existing cash. The rent the business pays now compounds inside the fund instead of the landlord's pocket.

Diversify out of shares into commercial

$1.4M SMSF balance, mostly listed equities. Member rolls $700k to cash to fund a commercial property purchase. Target: $2M industrial unit on a 6% net yield with a 5-year lease to a unrelated tenant. At 70% LVR, $1.4M loan, ~$120k stamp duty, $200k liquidity buffer. Rent of $120k/year more than services the ~$108k annual interest cost — fund earns roughly equal yield to its previous equity position with materially less volatility.

Refinance an existing SMSF loan

SMSF holds a $1.2M loan at 9.25% from a niche lender. Market rates for prime BRP now sit at 7.5–8.0%. Refinance saves 125–175bps — on $1.2M, roughly $15–21k per year of additional income compounding inside the fund. Over a 10-year remaining term, $150–210k accrues. The discharge of a bare trust LBA is more involved than a standard refinance but is well-trodden.

Typical lender policy

Active panel: Macquarie, Liberty, La Trobe, Thinktank, and a handful of specialist SMSF lenders. Most major banks have withdrawn from SMSF property lending — those still in the market apply tight policy. LVR: 70% standard, 75–80% for prime BRP with strong covenants. Minimum loan: $250k typically; some lenders to $150k. Maximum loan: $3–5M for most lenders; specialist appetite to $10M+. Rates: 7.0–8.5% prime, higher for harder profiles. Liquidity: 10–20% of asset value held in cash inside the fund post-settlement.

The structure work — bare trust deed, custodian setup, LBA documentation, related- party lease — is best handled before you go to market with an offer. Trying to compress it into a 30-day settlement window almost always slips.

Related products

• SMSF Commercial Loans → — full product, lender panel, structure and rate detail
• Full Doc Commercial Loans → — for buying outside super
• Lease Doc Loans → — same ICR logic applies to lease-serviced commercial
• Commercial Refinance → — including SMSF LBA refinance