SBA Loans Simplified
SBA (Small Business Administration) real estate loans offer eligible small businesses long term fixed or floating-rate loans with low down payments (up to 90% LTV/LTC). There are 2 SBA loan programs that can be used for commercial real estate, SBA 7(a) and SBA 504. These two programs have some similarities, but one will likely be a better fit on a case by case basis. To qualify for SBA loans, a commercial property must be owner-occupied meaning that the borrower's own business must occupy at least 51% of the available square footage (60% for new construction).
Eligible Property Types
The SBA 7(a) program allows access to working capital for a variety of business purposes. 7(a) loans are a good fit for company growth. For commercial real estate, these loans are maxed at $5M and can be self-amortizing up to a 25 year term. Businesses applying for the SBA 7(a) loan program must be profitable and in business for 2+ years.
SBA 504 loans are similar to the 7(a) program, but have the advantage of lower fees and larger loan amounts. 504 loans can also be used for construction and development of a property for your business. SBA 504 loans can provide up to $10 million of financing with a 20 year amortization. Businesses applying for the SBA 504 loan program must be profitable and in business for 3+ years.
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