Because the bank or lender is providing the loan, they are responsible for the down payment amounts required for an SBA 7 (a) loan. The SBA or any other institution sets a strict down payment amount, but lenders usually ask for 10% or more for riskier businesses. The SBA 7 (a) loan program prohibits the use of funds for investment property, such as an apartment complex, single-family housing, or any type of commercial real estate that is not occupied by its owner. You can use an SBA 504 loan to buy, build, or improve commercial real estate or to purchase heavy equipment.
Talk to one of our SBA 504 loan experts to learn how you can take advantage of a long-term, fixed-rate, low-down payment SBA commercial real estate loan. Many of our borrowers find that their loan payment ends up being lower than what they paid in rent. CDC are non-profit corporations that promote economic development in their communities through the loan program offered by the United States 7 (a) real estate loan, often involving larger loan amounts and longer terms than other 7 (a) loans. SBA 504 loans are specifically designed to finance real estate and other fixed assets, but the 7 (a) loan may also be a viable option.
Growth is good news for lenders and borrowers, and now might be the time to apply for a commercial mortgage through the SBA lending program. Most SBA 7 (a) loan terms limit repayment to 10 years, and working capital loans are usually restricted to seven years. SBA 7 (a) loans are flexible and can be negotiated according to the needs of a particular company, making them a viable option for many small businesses buying real estate. Undoubtedly, this SBA real estate loan cannot be used to provide working capital or refinance debts, so if you're looking for a more versatile loan, consider your other SBA real estate loan option, the SBA 7 (a) lending program.
If you're one of the few who qualify for an SBA real estate loan, you have two options: consider the SBA 504 loan specifically for real estate or the more versatile SBA 7 (a) loan. You can explore different funding options, from traditional bank loans to the new wave of online lenders, but don't overlook the possibility of SBA real estate loans. 504 loan fees, including funding fees, underwriting fees and attorney's fees, can be added to the loan and will amount to just over 1% of the loan amount. Both the LTC (Loan-to-Cost) and LTV (Loan-to-Value) ratio are key factors in any commercial real estate construction project.
You should expect an SBA 504 loan or 7 (a) loan to take at least 2 or 3 months from the time you submit your loan application. You can get a commercial mortgage with the SBA 7 (a) loan for a wide range of industries and property types. SBA 504 loans offer fixed-rate financing, while 7 (a) loan products offer lower fees but adjusted quarterly variables. If you're looking for an SBA real estate loan to buy a property, the 504 and 7 (a) loan programs are your best options.