How Owners of a Factory or Manufacturing Facility Approach a Commercial Mortgage
Buying the factory or manufacturing facility you run is a defining step for any operator, turning rent into an owned asset and giving you control over power, floor layout and logistics. At Ardent Capital Group we speak with manufacturers about this kind of purchase often, so this guide covers how a lender reads the deal and what moves the number.
Ardent Capital Group is a specialist in commercial mortgages for factory and manufacturing operators across Australia. Our team can help you move from tenant to owner, with clear lending advice on structure and strategy.
- Funding capacity: We arrange finance from $100,000 to $10,000,000+, matched to your facility and cash flow.
- Track record: We have helped facilitate over $500,000,000 in funding over a decade for over 1,000 borrowers.
- National coverage: Sydney, Melbourne, Brisbane, Perth, Adelaide, Canberra, Hobart and surrounding regional towns.
- Sector focus: Manufacturing, fabrication, food production, logistics and industrial property.
Our brokers work the full lender panel, not a single bank, and can arrange a factory property loan matched to how you occupy the site.
Why factory and manufacturing facility owners choose to buy
Factory fit-outs are capital heavy and tied to the building. Power upgrades, overhead cranes, reinforced slabs, gas and steam lines, dust and fume extraction, cold rooms, HACCP or GMP areas, forklift charging and high-bay storage all anchor operations to one address. Location drives freight cost and delivery times, with proximity to ports, arterial roads and suppliers affecting margins. Sector resilience in core manufacturing, engineering services and food processing supports long-term occupancy. Mortgage repayments build an owned asset, and improvements like solar PV, LED lighting and upgraded mains power can lift value.
Main drivers:
- Control of infrastructure: Secure three phase supply, mains upgrades, cranes and slab specs without landlord constraints.
- Operational stability: Reduce relocation risk, preserve certifications, keep HACCP or ISO validations intact.
- Cost discipline: Convert rising industrial rents into repayments that build equity over time.
- Productivity gains: Order flow for production lines, loading docks, drive-through access and forklift movements.
- Asset value: Improvements such as solar PV, sprinklers, additional roller doors and mezzanines can enhance valuation.
Buying may not suit if your lease horizon is short with a planned site move, if you expect a shift in production method or automation that needs a different building, or if capital delivers a higher return in plant, research and development or new contracts. The decision sits with you.
How lenders approach a factory and manufacturing facility purchase
- Deposit and LVR: A factory is standard commercial security, so it gears to around 80 per cent, which means a deposit from about 20 per cent. The major banks publish no owner occupier commercial LVR at all, so knowing which lender to approach is where a broker earns their place. Stronger industrial assets and owner occupier profiles support the top of that range, subject to assessment.
- Loan term and structure: Banks commonly publish 10 to 15 year terms, while non-bank lenders can extend to 25 or 30 years. Repayments can be principal and interest for steady amortisation, or interest only for a period to preserve cash flow during commissioning or capex ramps.
- Security and serviceability: The property is the primary security. Lenders assess business financials, cash flow, debt service cover, existing liabilities, and director support where relevant. They consider the sustainability of margins, customer concentration and order book.
- Owner occupier treatment: Lenders generally view owner occupation favourably due to lower vacancy risk and alignment between business performance and property upkeep. This can assist pricing and terms.
Ownership structures a lender sees
Many factory operators hold the freehold in a separate entity, such as a company or trust, and lease it to the trading business at a commercial rent. A lender then reads that inter-entity rent as the serviceability line and the property as the security. Where the lease reflects market rent and the usual outgoings for the industrial precinct, the file presents cleanly.
Some operators hold the factory in a self managed super fund and lease it back to the trading business at market rate, since commercial premises typically qualify as business real property. A fund that borrows to buy does so under a limited recourse arrangement, with a bare trust holding the asset while the loan is repaid. The finance is ours to arrange, your accountant confirms the tax and entity detail, and a licensed SMSF adviser signs off the fund side where one is used.
Plant adds one more consideration. Machinery is non-serial-numbered property, so a security interest over it cannot be found by searching for the machine. A buyer or their lawyer searches the PPSR against the vendor's ACN, and the ordinary course of business exception does not clear it, because a manufacturer's ordinary trade is selling what it makes, not the machines it makes it with.
The lender's checklist
- Business financials: Recent financial statements, tax returns and BAS, with attention to EBITDA, add-backs and stability of gross margins.
- Serviceability: Debt service cover ratios, interest cover, and sensitivity to input cost swings in energy, raw materials and labour.
- The property: Zoning and permitted use, power capacity, slab rating, cranes, sprinkler coverage, roller doors, hardstand, loading access and parking.
- Valuation: Independent valuation reflecting building condition, improvements such as solar and fit-out, comparable industrial sales and local vacancy.
- Environmental and planning: Contamination risk, trade waste and wastewater permits, EPA or council conditions, and any remedial obligations.
- Deposit and equity: Cash on hand, retained profits, or the ability to leverage your equity in other property to complete the deposit.
- Lease and occupancy: For owner occupiers, proposed lease-back terms to the trading entity if a separate holding entity is used.
A specialist broker who works daily with factories and industrial property can present the right structure and lender shortlist for this sector.
One way this can play out
This is an illustrative scenario that shows the kind of situation we can assist with, and how the thinking might run.
- Situation: A precision metal fabricator in outer Melbourne, $8,500,000 turnover, renting 2,500 sqm with 400 amps, a 5 tonne gantry crane and a compressed air ring. The landlord is selling, and a 3,000 sqm tilt panel facility nearby is listed at $5,200,000.
- Constraints and goals: Maintain crane capacity, increase power to 630 amps, add solar PV, avoid production downtime, and preserve working capital for a new laser line.
- Options we would map:
- Owner occupier finance to around 80 per cent, deposit via cash plus equity in the director's residential investment property, interest only for 24 months during the capex ramp.
- Up to 100 per cent of the purchase by adding a second property as security and aligning the lease-back to a holding trust at market rent, moving to principal and interest from year three.
- A split structure with separate equipment finance for the laser and press brake, keeping the property loan clean and on a longer term.
- Structures a lender would see: The property in a discretionary trust with a corporate trustee leasing to the trading company, or a unit trust co-owned by a family trust and an SMSF for a minority interest, on market rent and arms-length terms.
- How we would approach it: We would map the ranges, structures and repayments, size the target repayments to comfortable interest cover on recent EBITDA, and match the commissioning timeline to the interest only period. The figures above are illustrative, not confirmed outcomes, and any LVR and pricing would follow valuation, environmental checks and full credit assessment.
Other lending we can help with
- Asset finance for plant and equipment: CNC machines, lathes, press brakes, injection moulding, packaging lines, ovens, mixers, automated cells and forklifts financed with terms matched to productive life, through factory equipment finance.
- Fit-out and refurbishment finance: Power upgrades, switchboards, cranes, racking, dust and fume extraction, HACCP or GMP areas and flooring improvements funded without draining cash.
- Working capital loans: Support raw materials, longer supplier lead times and contract ramp-ups tied to purchase orders, with working capital for a manufacturer.
- Business overdraft: Smooth receivables cycles and seasonality, with limits aligned to debtor ageing and inventory.
- Refinancing and debt consolidation: Reset pricing, extend terms, and consolidate legacy facilities into a cleaner structure that reflects current performance.
- Construction and renovation: Extensions, extra roller doors, mezzanines, cool rooms, hardstand and office refurbishments aligned to planning approvals.
- Business or premises acquisition finance: Buy the property or acquire a competitor, with structures that consider goodwill, equipment and real estate.
Owning the premises can free equity for plant upgrades over time, and a refinance can rationalise facilities as the business scales.
Talk to a factory and manufacturing facility finance specialist
Ardent Capital Group arranges and structures commercial mortgages for factory and manufacturing owners, aligning finance to how you intend to hold and occupy the property. We understand power, cranes, slab loads and compliance, and we present lenders a clean, bankable position.
We service Sydney, Melbourne, Brisbane, Gold Coast, Perth, Adelaide, Canberra and surrounding metro and regional areas. Ardent Capital Group is a specialist in commercial mortgages and our team can help you today. We have helped facilitate over $500,000,000 in funding over a decade for over 1,000 borrowers. If you want a direct conversation focused on optimal financial outcomes, get in touch.
Questions we're often asked
How much deposit do I need to buy a factory?
A factory is standard commercial security, so it gears to around 80 per cent, which means a deposit from about 20 per cent. Stronger owner occupier profiles reach the top of that range, subject to full assessment.
Can my SMSF buy my factory and lease it to my business?
Yes, commercial property usually qualifies as business real property. Your SMSF can hold the asset and lease it back at market rent, subject to the super and borrowing rules inside the fund, which your accountant confirms.
Will lenders include my specialised fit-out in the valuation?
Valuers consider fixed improvements like power upgrades, cranes, sprinklers and mezzanines. Highly specialised or removable plant may be valued separately via equipment finance.
How do environmental issues affect approval?
The commercial valuation carries a site contamination questionnaire, so a site history or environmental report may be required, especially for coatings, plating, fuel or food processing. Lenders look for low contamination risk and compliant trade waste handling.
What LVR can an owner occupier manufacturer expect?
As standard commercial security, a factory gears to around 80 per cent, with the top of the range reserved for strong security and financials.
Can I fund the building and new machinery together?
You can combine a property loan for the site with asset finance for production lines and automated cells. Keeping them separate usually improves terms and keeps the mortgage amortisation longer.
Should I choose principal and interest or interest only while commissioning equipment?
Many manufacturers prefer an interest only period during installation and training, then switch to principal and interest once throughput and cash flow normalise.
Written by
Nick Chong
Managing Director, M.AppFin, Dip. Mortgage Mgmt
Nick holds a Bachelor of Agricultural Economics, a Master of Applied Finance and an Advanced Diploma in Financial Planning. He founded Ardent Capital in 2016 after more than a decade in financial planning and mortgage broking. For the past ten years he has led a team of finance specialists, mortgage advisers, brokers and credit analysts, all working to secure optimal outcomes for clients and always acting in their best interests. The team brings both a qualitative and a quantitative approach to every deal.
