Whether it’s your first or tenth time buying real estate (commercial or residential), you’ve probably spent time considering all of the loan options available to you. Land and real estate are two of the biggest expenses you’ll have as a business owner, so it only makes sense that a loan like the SBA (small business association) loan could work in your favor. In simple terms, yes, an SBA loan can be used to purchase real estate, land, etc. Let’s dig into it a bit further.
What exactly is a SBA loan?
The SBA loan is a commercial loan that is government backed and helps provide small, US-based businesses with funding. Most legally registered businesses can use these loans for help finance real estate, working capital, and even equipment. You should consider a SBA loan if you have a registered business and are looking to purchase commercial or residential real estate that is specifically tied to the operation of your business. NOTE that SBA loans cannot be used to purchase real estate that is specifically designed for investment purposes. Funding for small businesses is tricky, and is often a hurdle for the bootstrapped entrepreneur team, along with other restrictions they face like high risk credit card processing, etc.
How much downpayment do I need to purchase real estate with a SBA loan?
Much like other financing solutions provided by banks and government entities, downpayments can vary depending on many factors, including your institution of choice, current financial position, business credit, cost of purchase, etc. As a rule of thumb, 10% downpayment is a safe expectation for what many lenders will ask for. If you have questions about how your current financials may qualify for SBA loans, feel free to reach out to our preferred agent team at firstname.lastname@example.org
How long do SBA loans last?
Most SBA loans will run for 10 years, however the maturity for construction and real estate loans can run up to 25 years. It’s important to consider where this loan will place your finances, in the short and long term. There’s no one type of business or individual that is best suited for the SBA loans, but some important things to remember about them:
- Minimum SBA loans are in the $125,000 range
- Fixed interest rates
- 20 year maturity for real estate and land
What types of businesses typically use SBA loans?
There’s no one type of business that is best suited for SBA loans, but some of the most common that we see are bars and clubs, hotels, restaurants, and retail spaces. If you’re in the market for real estate for your own existing restaurant or business brand, SBA might be a good fit. Feel free to reach out to our preferred broker team at bizpappa.com to learn more about how we can help.