Build or Buy a Commercial Property

Secure Your Business Property

Ready to get out from under your business lease and own the property yourself? Improve your company balance sheet and cash flow by adding owner-occupied property (at least 51% usage by your business) to your ownership. SBA programs are available for this purpose under the 7(a) or 504 program. Funds are also available for the renovation or refinance of your existing owner-occupied commercial property or for brand new construction of your building.

Brainstorming
 

Adding or Improving Owner-Occupied Real Estate for your Current Business

Funding can be accessed to purchase commercial real estate associated with your current business (i.e. under a lease), to refinance or renovate your current owner-occupied property, or to enable new construction for your company. The most popular program is the US Small Business Administration SBA 7(a) loan program. This program has some very attractive features that you should know about:

  • loan-to-value (LTV) of up to 90% means that you may need to contribute 10% of the acquisition price from your own cash/funds

  • highly competitive FIXED interest rates on terms up to 25 years with real estate

  • very light pre-payment penalties in the first three years (and none after that)

  • a wide range of large loan sizes: from $100K without real estate and up to $5 million with real estate

The SBA 504 program is very similar but starts at amounts where the 7(a) program ends. It is designed for larger commercial real estate purchase/renovate/refinance deals above $5 million and up to $25 million. It has some additional loan structure requirements that can be explained if needed.

Furthermore, all of the above can be done at a speed well ahead of traditional bank lending programs. With SBA Preferred Lending Partners (PLP), it is typical to see a proposed loan sheet within 48 hours and, upon successful underwriting, a deal closing within 45-60 days. In contrast, a typical big bank is not highly focused on SBA loans as it is merely one of their many offerings and thus SBA lending is a slow process. 

In the case of new construction of a commercial real estate project, a short-term bridge loan may be appropriate in the case of selling to another party upon completion of the new construction.