Commercial real estate investment can be a great way to secure and grow a business. The chance to invest in a property that can not only house your staff but can also provide rental revenues to your company is a win-win. Commercial real estate financing can enable businesses to acquire the real estate they need.
Features
Maximum Loan Amount
- Conventional: 75% to 80% of the appraised value or purchase price, whichever is less.
- SBA 504: Up to 90% financing of the total project cost (Including land, construction/renovations, soft costs, and closing costs)
Loan Term
- Conventional: 3 or 5 years with balloon or call and a 10 or 15 year amortization
- SBA 504: 1st Mortgage: fully amortized over 25 years; 2nd mortgage: below 20 years, fixed rate
Interest Rates
- Conventional: Competitive fixed or variable rates
- SBA 504: 1st mortgage: Competitive fixed or variable rates. 2nd mortgage: Usually 0.5 to 0.75% less than competitive rates; fixed for 20 years
Speed
As little as 2 weeks with preferred SBA lenders
How it works
Commercial real estate loans can differ significantly depending on the type of property being financed. If you are interested in buying and financing a piece of land, then developing a custom office building on that land, there are commercial financing programs that will help you do that.
If you’re interested in purchasing an existing warehouse, the commercial lending companies will be able to help you do that, too. The two different loans will look quite different, though. A loan for an existing piece of land, or an existing warehouse, will be different from a loan for a speculative building that doesn’t yet exist.
In most cases, lenders will be happier when the commercial real estate will be occupied by the owner of the property. Just like a mortgage for a home, the collateral for the loan will be the property, and the financing company will prefer a property that’s occupied by someone who has a big stake in the care and management of the property!
Low adjustable or fixed rates
Most closing and soft costs rolled into SBA 504 loans
Long term options
Helps build or improve credit score
Down payment 20 to 25% for conventional loans; 10 to 20% for SBA 504
Closing and soft costs paid out of pocket for conventional financing
Prepayment penalties may apply
Longer applications and paperwork
What it costs
With reasonable interest rates ranging from 6-13%, SBA loans are an attractive option to many small business owners. Depending on the type of SBA loan you choose, you could have fixed or variable interest rate. Keep in mind that individual lenders have the option of adding an additional spread to the base rate of the loan when figuring your final rate with a maximum increase of 2.75%.Both the 7(a) and 504 loans have fees that can be included in the total cost of the loan.
A loan through the Microloan Program does not have fees but has a much lower cap on the total loan amount. Repayment on SBA loans ranges from 5-25 years depending on the amount and purpose of the loan.
Quick and simple process, from Quote to Funding.
Get a Quote
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Apply
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