SBA 504 or 7A - Purchase of Real Estate

Commercial Real Estate can be financed through the SBA Programs.  The SBA has loan programs called either the 7A or 504 program, which is specifically used for the financing of Real Estate oriented transactions, which can be a part of a business opportunity or not.

Today you can purchase the real estate occupy at least 51% and lease out the balance and still qualify for an SBA Loan.  If you structure the deal correctly the lease income could support the debt service on the SBA Loan.  The only factor that you have to be aware of is that if you decide to vacate the business property and just lease out the entire property you will be in violation of the loan covenants.  So be aware before you rely on the tenant income to cover all debt service and plan to stay in the property or create an effective exit strategy

The benefit to financing a Real Estate Oriented transaction through the SBA is that a business as a start up can buy real estate as part of the initial operation of the business, or an ongoing business can be sold with the real estate as well. The SBA has a very aggressive program when Real Estate is involved.

Borrower Benefits
Low down payment of only 10%
Long Repayment Terms - reducing monthly payments

Use of Proceeds
Purchase, construction or renovation of owner-occupied commercial real estate

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