Purchasing Commercial Real Estate with a Loan

Is your small business booming? Congratulations! Growing a business leads to some big decisions, especially if you’re running out of space. It might be time to consider a small business loan to purchase real estate so you can run your small business without being cramped.

The next question you need to address is “Where will I get the funds?” The good news is that SBA loan funds can be used for a small business real estate purchase.

It’s not always easy for mom-and-pop firms to get a U.S. Small Business Administration–backed loan. Big banks tend to favor larger deals, which are more profitable for them. So if you’re a small-business owner hunting for a lender, it helps to know that your current bank isn’t the only choice. Consider an alternative SBA lender like SmartBiz with fast qualifications and low rates. SmartBiz offers SBA loans to purchase real estate if your purchase price is between $150,000 to $250,000.

Making the long-term investment in a building for your company is a decision not to be taken lightly. Before you start looking for a lender to fund your real estate purchase, here are some things to consider:

  • Buying a building comes with maintenance costs. What happens if you have a plumbing leak? How about repairs? Think about the tasks you’ve been able to turn over to your landlord and factor in those costs.
  • Does real estate in your area generally rise in value? If so, you might make a tidy profit on your investment if you decide to buy. If not, are you prepared to take a loss when and if you sell?
  • As in buying a home, there are significant equity and tax advantages to owning your own building. Meet with your accountant or another financial professional to discuss taxes specific to your purchase.
  • Have you ever been a landlord? Consider buying a building with extra office or floor space. You can work with a real estate professional to lease out the remaining space. There are additional responsibilities involved in being a landlord, but the added income can help offset monthly costs.

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