Finance for SMSF trusteeslenders who understand bare trusts

The situation

A self-managed super fund trustee looking to buy business real property — often the premises the trustee's own business trades from — is working within a narrower and more specific set of rules than any other property purchase. The fund can only borrow through a limited recourse borrowing arrangement, using a bare trust structure, and the property itself needs to qualify as business real property acquired on genuinely commercial terms. The finance question sits inside a compliance question, and the two need to be worked through together rather than treating the loan as a standard commercial purchase with extra paperwork attached.

This is a genuinely common strategy — a trading business paying rent to its own SMSF instead of a third-party landlord, building retirement savings through commercial rent rather than losing it to an outside owner. But the mechanics are specific: the fund's balance and ongoing contributions need to support both the loan and the fund's other obligations, and the whole arrangement needs to stand up to scrutiny as a genuine arm's-length transaction rather than a convenient way to move an asset into super.

Why the first answer is often no

Not every commercial lender offers LRBA facilities, and the ones that do vary in how comfortable they are with bare trust structures, related-party leases and the specific compliance requirements a fund carries. A trustee approaching a lender unfamiliar with SMSF lending can find the application stalls not because the fund or the property is unsuitable, but because the lender's own process isn't built for this structure. Settlement timelines can also clash with the time it takes to establish the bare trust and satisfy compliance steps, particularly where the trustee's adviser is engaged late in the process rather than from the outset.

A mainstream bank credit assessor, working from a standard commercial mortgage checklist, may also simply not recognise the structure in front of them — asking for information that doesn't apply to a bare trust arrangement, or missing the specific documentation an LRBA actually requires. This isn't a reflection of the fund's position; it's a mismatch between a generalist process and a structure that needs specialist handling from the first conversation.

How it gets funded

SMSF commercial loans are the core facility, structured as a limited recourse borrowing arrangement with the property held in a bare trust for the fund, and lenders assess serviceability against the fund's own income and contributions rather than the trustee's personal finances. Loan-to-value ratios are generally more conservative than a standard commercial mortgage, reflecting the limited recourse nature of the lending. Where settlement timing creates a short-term cash requirement — commonly around a GST liability on the purchase — settlement and GST funding covers that gap separately from the main facility.

We place SMSF files specifically with lenders set up for bare trust and LRBA lending, rather than a generalist commercial panel unfamiliar with the structure, which is usually what separates a smooth settlement from one that stalls on structural questions late in the process.

What to have ready

⚠ Confirmation from your SMSF adviser or accountant that the fund is eligible to borrow for this purchase, the property details and any proposed lease (including to a related party, if applicable, on arm's-length terms), the fund's financial statements and contribution history, and the bare trust documentation your lawyer prepares alongside the loan.

Working with us

We start by confirming the shape of the transaction with you and your adviser — the property, the fund's position and the intended use — before approaching lenders, since the compliance questions here sit ahead of the finance ones. From there we place the file with lenders experienced in SMSF commercial lending, so the loan structure and the compliance requirements are handled together rather than as separate, competing timelines.

Throughout the process we coordinate directly with your accountant and lawyer rather than expecting you to relay information between three separate parties, and we work to the settlement date the transaction actually requires rather than a generic commercial timeline. Where the property is being leased back to your own business, we also make sure the lease terms are documented in a way that will hold up under later compliance review, not just at the point of settlement.

⚠ Whether an SMSF LRBA is the right strategy for your fund at all is a question for your accountant, financial adviser or SMSF specialist — our role begins once that decision is made, arranging the loan itself against the structure they've confirmed is appropriate.