Purchasing commercial real estate can be overwhelming, not to mention expensive, especially for small businesses. Since it’s a sound investment, the SBA has designed a loan to help business owners purchase commercial property.
If you’re a small business in the CRE development space, can you qualify for an SBA loan for commercial property? And can you use that financing to purchase properties for further development?
The short answer is no, CRE developers do not qualify for an SBA commercial real estate loan.
Commercial real estate developers incur significant costs when preparing sites for construction. While their site development expenses are not eligible for SBA financing, the property once sold to a small business will qualify for an SBA loan.
Here’s what a CRE Developer can do:
- Sell a developed property to a small business that is eligible for an SBA loan
- Sell a commercial real estate plot to a small business prior to construction
By selling the CRE prior to construction, the financing provided by SBA to the business owner will bring down your costs at the construction stage, help you offset expenses, and see a project through to completion.
How We Can Help
If you are a commercial real estate developer, you can partner with BFC. With our knowledge and expertise, we can help you convert prospective business leads into deals.
- We support CRE developers by providing the right marketing tools to secure mortgage loans for interested buyers.
- We help buyers structure their loans through our loan program to increase their chances of approval. This gives them the purchasing power required to buy your buildings, pre and post-construction.
Advantages of an SBA Loan for Real Estate
You’ll agree that with mounting debt, taking up additional projects can be difficult. This is precisely where SBA loans can ease your situation.
- The loan term varies between 10, 20, and 25 years.
- Borrowers will not have to deal with interest rate fluctuations in the future since up to 90% financing is provided at fixed, below-market interest rates.
- Soft costs and other related fees can be financed in the out-of-the-pocket, loan minimizing expenditure.
- If you are SBA-eligible, you can get a loan of up to $5 million for public policy and standard 504 projects. For a 504 energy-efficient, green project, you can get an SBA loan for up to $5.5 million per project.
Learn whether your properties are eligible for our mortgages and how you might use them to increase your customer base.