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How to Qualify For an SBA Commercial Real Estate Loan

Business owners can purchase owner-occupied commercial real estate with up to 100% financing.
October 23, 2022 | NEWS & ANALYSIS
How to Qualify For an SBA Commercial Real Estate Loan

How Do You Qualify for an SBA Commercial Real Estate Loan?

A commercial real estate loan is financing used to buy 51% or more owner-occupied commercial property. In addition to real estate, you can receive funds for inventory, equipment, working capital, and more, all in one business loan request.

With a commercial real estate loan, established businesses can purchase commercial real estate using an SBA loan with 100% financing. SBA financing of commercial real estate is only for owner-occupied businesses, which by definition means your business needs to occupy at least 51% of the total commercial space.

How Do You Quality for an SBA Commercial Real Estate Loan? What are the Requirements?


Many lenders insist on a minimum of 25 percent down, which you must pay upfront and can keep you stuck at leasing. The lender will also want to see that you have enough cash on hand for the down payment and closing costs. This may require you to save up for months before you start shopping around for commercial properties. And get the ball rolling.

At LoanBud, we have helped countless self-employed individuals get approved for an SBA 7(a) loan with 100% financing to purchase their commercial property.

To get 100% financing, your business must be in operation for at least 2 years and have a track record of making lease payments comparable to that of the new SBA loan payments. For businesses who have been in business for less than two years, or who are expanding and purchasing commercial real estate for an additional location, lenders typically require a 10% down payment.

Other essential things to consider when choosing a commercial real estate loan are the interest rate, terms, and how much of the commercial space needs to be occupied to qualify for an SBA loan program.

It is important to know that SBA financing is only for owner-occupied businesses, which means your business needs to occupy at least 51% of the total commercial space.

To learn more about how you can get an SBA loan for commercial real estate with $0 down, schedule a consultation today.

 
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What are the interest rate and terms on an SBA commercial real estate loan?

The SBA caps the interest rate that lenders can charge, which means it's usually below the market rate. Most SBA 7a loans are based on the prime rate plus a margin not to exceed 2.75%.

A typical bank loan comes with a 15-year repayment term, with balloon provisions that require refinancing every few years. SBA loans that include a real estate component can be repaid on a 25-year term, leading to lower monthly payments, and do not have balloon payment features.

Can I use my SBA commercial real estate loan for other business expenses?

 Yes! One of the great features of self-mortgage loans is the ability to include other business needs into your loan request, including funds for equipment, inventory, working capital, and more.  

What documents do I need to provide?

 There are several documents you will need to provide when applying for an SBA loan[1]: 

  • Personal Background and Financial Statement
  • Business Financial Statement
  • Business Certificate/License
  • Loan Application History
  • 3 Years Income Tax Returns
  • Resumes
  • Business Plan Overview and History
  • Business Lease

[1] These items are an example of what is required. Additional documentation may be required based on your individual credit application.

 

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Purchasing Commercial Real Estate For Your Business

We understand as a business owner, you want to be successful, and we know how hard you've already worked to get here. You want to build for your future by purchasing a commercial property, but to achieve your goals, you'll need a self-employed mortgage loan. The problem is that conventional bank loans require high down payments of 25%.

 We believe small businesses need cash to grow and that depleting liquidity by requiring massive down payments is just wrong.

 At LoanBud, we allow established businesses to purchase commercial real estate using an SBA loan with 100% financing. To get 100% financing, your business must be in operation for at least 2 years and have a track record of making lease payments comparable to that of the new SBA loan payments[1]. For startups or business acquisitions, we typically require a 10% down payment. Schedule a consultation to learn more about how you can get an SBA loan for commercial real estate with $0 down.

[1] Other conditions may apply based on your individual credit application

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