I'm finding more and more that small businesses across the land aren't taking full advantage of the wonderful financing opportunities afforded to them via SBA Loans. Small business & Real Estate are vital to the growth and evolution of our culture & economy...in my humble, yet significant opinion:-) Today, I'd like to take a look at Commercial Real Estate Financing through an SBA loan. I'll go over some commonly asked questions and give you the answers to better help you decide if an SBA loan is a good fit for your Commercial Lending needs. You'll want to contact your Mortgage Professional for further questions and/or to proceed. I am a Mortgage Professional licensed throughout the State of Pennsylvania. So, if you have property or looking at property here in Pa, I'm your Huckleberry!
Acquisitions, Expansions & Refinances
* Fixed, adjustable, and collared rates available with several prepay options to match your financing needs. There's flexibility here folks, this sure helps to ensure you aren't trying to stuff round holes with square pegs.
* Up to 90% financing, including property improvements and ground-up construction. Frankly, this helps keep a bit more money in your pocket!
* Loan terms up to 25 years.
* Knowledgeable in Section 1031 exchange transactions.
* Eligible to receive a Line of Credit for working capital.
FAQs
Why should I choose an SBA loan versus conventional lending? SBA lending offers many advantages over conventional & bank lending, including longer amortizations, lower equity injection in most cases, very competitive interest rates, and the flexibility to include equipment, refinance of existing loans, and working capital into the building financing.
What types of properties can be financed with a SBA loan? Any type of property, the stipulation is that the property will be used by an eligible small business which occupies at least 51% of the property being purchased (60% if the loan includes ground-up construction). Properties that are considered ineligible are those such as multi-family, churches, self storage, mobile home parks, and investment properties.
What is the term difference between an SBA loan and a conventional loan? An SBA loan offers a longer term of 25 years compared to a 20-year term for conventional loans. This translates nicely into a lower monthly payment:-)
Can an SBA loan be used for ground-up construction? Yes, not only is construction eligible, but all fees associated with the land purchase, construction, design, etc. are eligible. Under certain programs, moving expenses and working capital can also be added to ensure a transaction that is smooth as a baby's behind.
What are SBA requirements for owner occupancy? The SBA requires at least 51% occupancy to the operating company purchasing a building --- 60% on new construction. Remaining space should be commercial occupancy.
Is my loan assumable if I need to relocate to a large building? Under what's called the 504 loan program, the SBA's second mortgage loan is assumable; although, the buyer would need to qualify for a new first mortgage, and the assumption is at the discretion of the SBA. This can be a huge selling point for attracting buyers to your property!
Can I refinance my real estate with an SBA loan and cash out? A refinance is possible if it meets the criteria of the specific loan program. The 504 loan program can only be used to refinance in a 9-month time frame from the initial completion of the project and does not include any "cash out." There's another program that can be used to refinance an unfavorable loan and can include working capital or money to be used for expansion and equipment.
More Niches You May Want To Check Out!
Jason Sardi
Mortgage Consultant
First Choice Equity Group Inc.
610-439-2166 ext. 229
Jennifer - And that's a wonderful thing!
Greg - I'm kind of intrigued that I hear & read very little about this nice financing tool for current and prospective small business owners.
Karen - Thank you! I will be here all week:-)
Jason,
Good summary. I retired from the SBA and worked with the finance programs for several years. Thank you for spreading the word!
The SBA is particualy interested in making loans to rural areas and are offering attractive terms.
Hey Jason. Thanks for writing this post. I learned more about SBA that I didnt know before. You dont do loans in DC by any chance do you? Great post.
My husband is currently obtaining financing through an SBA loan -- I'm sorry Jason, I didn't know you do these as well. :-(
But, I can vouch for everything Jason is stating in this post! I think the most important part of an SBA loan, personally, is that working capital can be included in the loan and is also encouraged by the SBA. They know that a business needs working capital to be successful, especially during the first several months.
Nice to be enlightened on the SBA Loans as well, thanks
Tom Davis - DE Realtor
Jason.... some really good information here.... I have never done an SBA loan. If I did get one, I would pass it along to a bank friend.... overall, explained very well here. nice job..
Jason,
Are the rates higher and with points?
Congratulations on yet another well-earned feature!!
Good question Neal...
Dez - Why thank you, that means a lot! Keep me on your list of Pa Mortgage Referrals;-)
Patricia - Unfortunately, I don't do D.C....at least I think. We are only licensed in Pennsylvania at this point. I'll have to check the SBA parameters on that (Commercial Financing is a completely different animal than Residential Financing in regards to Licensing Requirements). I will let you know.
William - Thank you sir! This is a very good program for Small Business Owners to consider.
Roger - Anytime my friend!
Ronell - Thank you!
The VanTeam - Thanks, I'm surprised the word isn't spread around more often about this program.
Larry - Sorry, I was super busy today. I'll touch base with you tomorrow and hope that I can help.
Wayne - Very true...
Frank - I'll be writing more about these programs, knowledge is power as they say:-)
Lanre - Come to think of it, let me check with my SBA Guy as I made mention to Patricia above. At the very least, I can lead you in the right direction.
Jeannie - I recall you mentioning that your husband is doing that, let me know how it goes.
Pam - Thank you for reading!
Sis - Awwww, thanks! Noogie for you:-)
Tom - It's a good product, another outlet for your clients.
Jeff - Bank friend? How about your Sardi friend?;-)
Kristin - If you have any questions, I'd be happy to help you or lead you in the right direction.
Neal - Rates aren't that much higher than Conventional Lending, pretty attractive overall. I will say though that SBA isn't cheap in fees and as far as mine, I charge on a case by case basis. 1-3 points is usually the range.
Matthew - Thanks my friend, hope all is well!
Jennifer - Did I answer it well enough hun?
Engleman - I have a feeling that Geary is going for some type of record. He's been impressive thus far;-)
Grossman - Grazie, you are the man!
Thank you for the post. I have learned a lot from it.
Great post with excellent information regarding the advantages of the SBA loan.