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Finding the funds to purchase commercial real estate is not always easy for a small business owner. Loan options can be overwhelming.
With such a big purchase, you want to make sure you choose a financing option that serves your needs. Whether you want to purchase, renovate, or expand an existing building, a Small Business Administration (SBA) loan could be a great choice. SBA loans are government-backed, so small businesses like yours can get financing with borrower-friendly terms.
At Business Funding Group (BFG), we are professionals with decades of experience helping small businesses secure funding. If you own a company and are looking to purchase a building or office, contact us to discuss SBA loans for real estate investment.
For commercial real estate, funds from an SBA loan can be used in various ways. One of the most common is for purchasing real estate. A small business can secure an SBA loan and use that money to finance the purchase of an office building, warehouse, retail location, and more.
Another use of SBA loan funds is renovating or expanding. A business might already own a building that needs repair or improvements, or perhaps the company has outgrown its space and needs to expand. An SBA loan could help fund those renovations or builds.
Both SBA loan programs 7(a) and 504 can be used to purchase commercial real estate investments. However, the 504 loan is more popular for this purpose.
With this loan, a small business can typically finance up to 90% of the purchase, which makes ownership a possibility for many businesses that might otherwise be stuck renting. Owning real estate is something many small businesses dream of, and an SBA loan could help get you there!
SBA loans have certain restrictions for businesses investing in real estate. One of the most important to understand is that SBA loans only apply to owner-occupied properties. So, the business must occupy at least 51% of the property for business operations. As long as you meet this standard, you are free to rent out the rest of the building.
The SBA explicitly disqualifies rental property businesses from eligibility for SBA loans. If a business wants to purchase real estate for the purpose of renting it out and generating passive income, an SBA loan will not get approval. The property must support the business, not be the business itself.
An SBA loan has many advantages for small businesses ready to purchase commercial real estate. The down payment required is often as low as 10%, which makes purchasing possible for business owners with limited cash.
The repayment period can be up to 30 years for real estate, resulting in reasonable monthly payments. Depending on the type of SBA loan you choose, you could secure a fixed interest rate.
Investing in real estate is an exciting move for a small business. SBA loans can help business owners finance their purchases. With low interest rates and long repayment terms, making a real estate purchase can be significantly more accessible.
Working with BFG can give you the confidence you need to get through the application process. We are experts in SBA loans and know exactly what is involved in securing loan approval. Contact us today to discuss SBA loans for real estate investment.
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