You may know that, in general, SBA loans are a convenient financing tool for entrepreneurs. But can SBA loans be used to purchase commercial real estate? The answer is yes, and today we show you what are your options and how to get started on an SBA loan.
What Are SBA Loans?
The defining feature of SBA loans is that they are partially guaranteed by the U.S. government through the Small Business Administration (SBA), a federal agency whose stated goal is to help Americans start, maintain, and grow their business.
SBA loans are particularly attractive because they often have less stringent requirements and longer repayment terms compared to traditional bank loans.
There are many different SBA loans available to business owners. But if you are interested in purchasing commercial real estate, your choice will come down to two types of SBA loans: 7(a) loans, and 504 loans.
SBA 7(a) Loans
7(a) loans are capped at $5 million, with terms that range from 5 to 25 years depending on the purpose of the loan (real estate, equipment acquisition, working capital, etc.), and a minimum down payment of 10%.
This type of loan is usually the best for business owners who want to purchase commercial real estate they already occupy.
Keep in mind that investment properties do not qualify for 7(a) loans. However, if you are planning to purchase this type of real estate, at Gellyfish we have options available for you. Contact us today!
SBA 504 Loans
The real estate you purchase with a 504 loan must meet certain requirements, including:
- Your business must have a tangible net worth of less than $15 million, with an average net income of less than $5 million after taxes for the prior two years
- You must occupy at least 51% of any existing buildings you want to purchase.
- For new buildings, you must occupy at least 60%.
- Your project must create or retain jobs
Other Alternatives to Purchase Commercial Real Estate
Purchasing commercial real estate can be a complex operation. While SBA loans are usually a great alternative, sometimes you need extra help to get funds or even a completely different solution. That’s why at Gellyfish we offer a wide array of financing services that include SBA loans as well as bridge loans and conventional loans.
Gellyfish: Certainty of Execution in Financing
Looking for financing solutions in California? Gellyfish is here to help. We offer financing with the certainty of execution you need to take your business to the next level.
Contact us today by email (firstname.lastname@example.org), telephone (877-800-4493), or social media (Facebook, Twitter, LinkedIn), to schedule a free consultation or to learn more about our full range of financing options.