How SBA Loans Can be Used for Commercial Real Estate Financing

The Small Business Administration is set up to facilitate the establishment and ongoing health of businesses with less than $7 million net worth and less than $2.5 million in profits after taxes. SBA loans are one of the ways in which this administration accomplishes its goals. Through the 7(a) and 504 program, Banks and alternative lenders utilize these platforms to help business owners purchase commercial real estate. With only 10%-15% down you can purchase your businesses real estate that could one day help you retire. Some Regulations The regulations around this type of lending have to do with which businesses qualify as the right size, which lenders these businesses can use and even what terms can be offered to the borrower. Since the SBA is partially backing these loans, it gives companies will less of a credit history or capital to still have the financing options they need without putting the lender at too much risk. With a little bit of research, and a visit to the Small Business Administration website, you can learn if you can qualify for this type of loan as well as what will be expected of you if you do. Some Uses SBA loans are generally used for the purchase of real estate, equipment and working capital. This can help your business start on the right foot or even help you grow into the next stage. For instance, your restaurant may be outgrowing your current location before you have the cash for a new or bigger one, a loan backed by the SBA can help you get into that new space sooner than saving up the funds yourself. Some other uses include, debt consolidation, business acquisition, and leasehold Improvements. Some Concerns It is a good idea to know exactly where and for what you can use funding backed by the Small Business Administration because you can get into bigger trouble with misusing this funding than you may think. Violating the terms of the agreement can disqualify you for further help from the SBA, so it is important to know and understand what is expected of you before signing any paperwork. In Conclusion SBA loans are a good way to help smaller companies secure the financing that they need to grow. Working capital, equipment loans, and business acquisition is just part of what qualifies for an SBA Loan. Many lenders will work with you and the SBA for this financing. This is because the Small Business Administration helps back part of the loan and reduce the risk for lenders.