Commercial Real Estate Loans
Business Property Real Estate Loans – Up to 25 Year Fixed Rates
SBA 7 (a) Small Business Loans
SBA 7(a) small business loans are commercial real estate loans that are fully-amortized over 20 or 25 years. This is very attractive for business owned properties, because most conventional commercial real estate loans have a loan term of only five to ten years.
SBA 7(a) loans are written as adjustable mortgage loans based on the prime rate. The loan fee depends on the size of the loan and the type of collateral (equipment versus commercial real estate), but the fees usually run between 2 and 3 points.
Small business owners can borrow between $200,000 and $5 million using the our SBA 7(a) program. Through our SBA Private Preferred Lender, borrowers with credit scores as low as 600 can qualify. Approval within 2 to 4 days, funding typically within 4 to 5 weeks, depending on appraisal. If your business property size is a little less, please contact us or call us at (317) 589-0118.
One big advantage of the SBA 7(a) program is that small businesses can often get loans up to 90% of the purchase price to buy commercial real estate for their businesses.
In order to qualify for an SBA 7(a) loan, the business owner must occupy, or intend to occupy, at least 51% of the commercial real estate being purchased. The commercial real estate cannot have a residential component.
SBA 7(a) loans must be fully-collateralized. In other words, the SBA lender may use the borrower’s inventory, receivables and equipment as collateral.
SBA 7(a) loans can also be used for working capital, to purchase equipment or to acquire businesses or franchises. The required down payments, however, are larger. Start-up borrowers will usually be required to put at least 20% down.
Private Funding for Owner Occupied Real Estate
The increased regulatory burden placed on banks has created a standardized approach to Commercial Real Estate (CRE) lending, leaving many small businesses behind. Our philosophy is dedicated to solution oriented real estate lending, we help fill the void created by traditional bank and finance companies. We offer commercial real estate loans starting at $200,000 up to $5 million to customers in most industries.
Our partners are direct SBA 7(a) lenders offering commercial real estate loans ranging from $200,000 to $5 million. 7(a) loans offer advantages to small businesses through extended terms and competitive pricing for the purchase or refinance of multipurpose owner-user real estate.
Our Private Lenders differ from the competition by offering creative solutions for business owners looking to take advantage of property ownership. Where the banks struggle, we thrive.
We pride ourselves on having quick approvals (2-4 days) and timely closings (within 30 days). We offer solution oriented service in order to get deals to the finish line.
Eligible Property Types- Office, Industrial, Retail, Self-Storage, Hotels, Auto Repair, Car Dealerships, Day Care, Gas Stations and more.
SBA 504 Loan Program
Small business owners thinking of purchasing or renovating commercial real estate or purchasing equipment to grow or expand their businesses should consider the U.S. Small Business Administration’s (SBA) 504 Loan Program. The 504 loan provides small businesses access to the same type of long-term, fixed-rate financing enjoyed by larger firms. Interest rates are equivalent to favorable bond market rates.
Most businesses would be eligible for this loan program. The 504 Loan Program defines a business as small if its net worth is under $7 million and net profits, after taxes, are under $2.5 million. Almost any type of legitimate business is eligible for 504 financing, including manufacturing, wholesale, service, professional service or retail.
A 504 loan may be used to purchase fixed assets such as: land and improvements, including owner-occupied buildings, grading, street improvements, utilities, parking lots and landscaping; construction of new facilities, or to modernize, renovate or convert existing facilities; or to purchase long-term machinery and equipment with a useful life of at least 10 years. Soft costs like architectural and legal fees, environmental studies, appraisals, and interest and fees on the construction and/or interim bank financing can also be rolled into the loan. Financing for other needs such as working capital, inventory, debt consolidation or refinancing are eligible through a separate SBA 7(a) Loan Guaranty Program.
A typical 504 project is structured with fifty percent of the project costs provided through a private-sector lender. This senior loan is usually for a 10-year term at a fixed or variable rate, depending on the relationship with the lender. Forty percent of the project costs are financed with a fixed-rate debenture secured with a junior lien from a SBA Certified Development Company (CDC). The debenture is backed by a 100 percent SBA-guaranty. And the final 10 percent of the project cost is provided by the purchaser.
The low 10 percent down payment is the big attraction of this program. It is possible to require even less from the business if a city, town or the state trying to attract businesses to their community is willing to provide a small piece of the financing in a subordinate position. Because of the lower down payment required and the ability to finance the soft costs, the small business will realize upfront cash savings of approximately $100,000 on a $1 million project.
The maximum SBA debenture can be up to $2 million. Certain manufacturing entities are eligible for up to a $4 million debenture. This means that a CDC can work with you to put together financing for a $10 million project with the bank providing a $5 million first mortgage with a SBA 504 debenture of $4 million, and only 10 percent equity.
Maturities of 10 or 20 years are available. Interest rates on 504 loans are pegged to an increment above the current market rate for five-year and ten-year U.S. Treasury issues. The rate on the 504 loan is fixed for the life of the loan and is set when the CDC sells the bond to fund the loan. Effective all-in rates, which include all fees and closing costs, on 20-year bonds vary monthly.
Consider the following advantages of the SBA 504 program versus conventional mortgage financing:
Advantages to the business:
- Low down payment . In most cases, the company is required to inject just 10 percent of the total project cost, which includes renovations and soft costs. This allows the business to preserve cash for working capital. (Ordinarily, banks require a 20 to 30 percent down payment on the purchase price.)
- Fixed rate on the SBA 504 portion. Small businesses don’t have to worry about the prime lending rate going up and can calculate the exact amount of their mortgage payments for 20 years.
- Long term. 504 loans are for 10 or 20 years. Because the CDC is in second lien position, the lender doing the 50 percent first lien loan is willing to lend at a longer term. Longer terms reduce monthly payments
- Low interest rate. Even with fees and closing costs included in the rate, the 504 program offers a low fixed rate for a subordinate mortgage loan. The blended rate between the lender portion and the SBA’s 504 portion makes the project very affordable, particularly for small businesses.
Advantages to the first mortgage lenders in a 504 project:
- The lender has less risk because the SBA 504 loan is in second position
- A lower loan to value ratio
- The first mortgage lender gets CRA credits
- Keep a growing customer happy
Eligible Property Types for 25 Year Fixed Rate SBA & Conventional Loans
- light industrial buildings
- retail buildings
- manufacturing facilities
- distribution facilities
- medical buildings
- dental office buildings
- research and development facilities
SBA Document Checklist
- Authorization to Release Credit (one for each of owner and or guarantor)
- Resume: Provide a current resume signed and dated (one for each owner)
- Last three (3) years of Personal Tax returns (for each owner and or personal guarantor)
- Last three (3) years of Business Tax returns (for each borrowing entity and or affiliate) If the current year business tax return has not been filed, please provide a year-end financial statement for the business.
- Interim Business Financial Statements dated within 60 days of Application Date (signed by principals)
- Accounts Receivable Aging (same date as interim balance sheet in item 9, signed & dated)
- Business Bank Statements – Three (3) months of business checking statements
- Business Debt Schedule(s) – signed by principa
- Resume Of owner
- Business Plan
- Personal Balance Sheet and Income
- Personal Bank statements 3 months (or more)
- Current invoice from payroll provider (if available)
- Three (3) months of merchant statements (if your business accepts credit cards from your customers)
- Purchase Agreement (of purchasing existing business)
Additional Items as Requested.
For more info on the Small Business Administration