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5 Reasons Business Owners Should Consider SBA Financing when Buying Real Estate

Article written by Carly Naples, Vice President of Business Finance Capital (BFC) 

You may be hesistant when considering buying real estate. But now with a SBA (Small Business Administration) 504 Loan Program, you have the opportunity to own your own building while boosting business growth and job creation. 

Here are 5 reasons why business owners should consider SBA financing when purchasing real estate:

1. You only put 10% down: The SBA 504 program allows business owners to put as little as 10% down for their owner occupied commercial real estate. This allows for retaining capital to be put back into the business to boost revenue and maintain inventory.

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2. Fixed 20 year interest rate: With interest rates continuing to rise, the SBA portion of the loan is a 20 year fixed, fully amortized loan. This gives small business owners a clear of idea of what they can expect to pay, allowing for effective planning and budgeting.  


3. SBA fees can be bundled in the loan: The SBA 504 loan fees (2.15% of the SBA portion) are financed into the loan and amortized over 20 years. They are not paid out of pocket, allowing small businesses to retain even more liquidity for working capital needs.


4. Collateral Limited to Business: In a 504 transaction, the bank and SBA will typically only take the subject property as collateral in the event of default. In the event that the business does not make it, the business owners' personal assets (such as a home) are protected and separate from the business.


5. Cost to Own vs. Cost to Lease: Business owners have the benefit of owning their own property and are not subject to annual rental rate increases (typically 3%) that are seen in the market, not to mention the tax benefits (depreciation & interest) that come with owning your own building. 


Even if you aren’t ready to make a purchase just yet, or if you need more information on SBA Financing, it’s never too soon to start learning what the SBA and banks are looking for when reviewing loan applications. 


Business Finance Capital (BFC) is a Certified Development Company that provides up to 40% of the financing and the lender typically provides 50%.  


For more information on SBA Financing, contact Carly Naples, Vice President of Business Development with BFC. She has over 4 years of experience working with small business owners and has funded over $100 million in SBA debentures. For questions or prequalification, call Carly at (213) 369-9947 or email her at carly@bfcfunding.com.


Contact Carly


If you're interested in buying commercial real estate, contact our team at 949-231-5022, or email us at info@windwater.com.



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