If you own a small business, there are a number of ways to expand and strengthen your bottom line. With an infusion of low-cost funds, you can increase inventory, purchase equipment, shore up working capital and more.
There are small business growth strategies you might not have considered. Have you thought about purchasing the commercial real estate (CRE) where you run your business? Are you wondering if you can get a small business loan for real estate? If you already own the property you operate your business out of, a refinance can get you a better rate, a longer term or avoid a balloon payment.
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1. Benefits of a Commercial Real Estate Purchase or Refinance
Saving for the Future
According to the U.S. Small Business Administration, compared with their wage and salary counterparts, business owners are less likely to hold retirement assets compared with non-business owners. A commercial real estate purchase can increase your net worth and help you save for the future.
If you sub-lease space you’re not using for your company, you can secure a steady income stream. Even if you sell your business or move locations, you’ll still be able to lease the space, adding another source of income.
There can be significant tax advantages when you own commercial property. Be sure to consult with an accountant or another professional to discuss specific taxes and other financial implications.
2. What to Consider
Making the long-term investment in a building for your company is a big decision. Here are some things to consider before you look for a lender.
If you’ve been renting, repairs and other maintenance tasks are turned over to a landlord. Consider the costs involved when you own a property. When something needs repairs or upgrades, you’re on the hook.
Does real estate value rise in your location? If not, are you prepared to take a loss if you sell? Research real estate in the area before you buy.
Property owners should consider everyone who will be on the property every day. According to the legal website NOLO, more people on the property means more of an opportunity for injuries or property damage that can cost you. Be sure to consult with an attorney to discuss potential legal implications.
3. Next Steps
Once you’ve determined that a commercial real estate (CRE) purchase or refinance will work for you, it’s time to consider what type of loan is best.
If you’re looking for low-rates, long terms and excellent customer service to guide you through a commercial real estate loan process, giveSmartBiz Loans® a try. We facilitate only SBA loans through our bank partners so we’re really good at it! Our SBA preferred bank lenders offer loans from $500,000 - $5 million with low interest rates and a repayment term of 25 years, meaning payments are very low.
To qualify, you must meet the following criteria:
- At least 51% of the property's square footage must be occupied by, and used by, your business
- 2+ years in business
- Business owners must be U.S. citizens or legal permanent residents
- Business owners must have personal credit scores above 675
- Cash flow to support loan payments
- The estimated purchase price must be greater than $500,000
- The rent replacement option requires a loan payment that does not exceed the current monthly lease expense and minimal down payment is required.
Here are recent examples of SBA loan commercial real estate purchases facilitated by SmartBiz Loans:
- $450,000 25-year SBA 7(a) Loan CRE Purchase
With just 10% down, SmartBiz Loans facilitated financing for the purchase of an owner-occupied commercial property for a San Diego IT consulting company. The borrower replaced a lease payment with a long-term, affordable SBA loan payment, allowing him to add additional space and continue company growth.
- 25-year SBA 7(a) Loan CRE Purchase
A Tucson attorney facing a maturing lease secured an SBA loan through SmartBiz Loans to purchase a single tenant office property with only a slight monthly payment increase. A 10% equity injection financed additional tenant improvements and closing costs at over 100% loan-to-purchase price.
SmartBiz Loans works with a number of preferred SBA lending banks. We match you with the one most likely to fund your loan so we can help you get to a “yes” faster and easier. Additionally, dedicated Relationship Managers are on hand to guide you through the application process.
Do you need extra funds for your small business? An SBA loan is the best bet for small businesses with low rates, long terms and low monthly payments. Visit SmartBiz Loans® today and discover in about five minutes if you’re qualified to apply for an SBA loan with one of our bank partners. Check out our great reviews on TrustPilot!