Having space out of which to work is an important part of planning or founding any small business. Whether you’re starting your own business from the ground up, or looking into buying into a franchise, you’ll need to have a physical space. Finding the ideal space for your business, be it storefront space in a booming downtown center, or a bigger space suitable for manufacturing is only the first step. After that, you face the challenge of identifying how to afford that space. Don’t fret, though, there are multiple options to help you get the funds you need in order to purchase commercial real estate.
The U.S. Small Business Administration offers two types of loans that can help you pay for your property. The SBA 504 loan is specifically designed to help those looking to purchase property, or purchase, build or renovate existing buildings. It is offered through approved bank lenders in combination with a third party called a Certified Development Company. These loans will offer up to $5 million with a repayment term of either 10 to 20 years. You’ll need to provide 10% of the loan sum as a down payment.
The other option offered through the SBA is the 7(a) loan, which is a flexible option that can be applied to commercial real estate purchases. This option offers similar beneficial terms, including long repayment terms and lower interest rates. With either of these options, expect a lengthy and demanding application process, but remember that the SBA’s intention is to help small businesses thrive, so you’ll also gain access to a number of resources to help you do so.
Of course, you could also seek to get a standard bank loan in order to purchase the space that your small business needs. In this case, you’ll be seeking a traditional loan through a commercial bank, so the application process will be more dependent on your financial history and credit score, but there’s a chance that the process will be more familiar.
The Bottom Line
When it comes down to it, your small business needs space in order to thrive, and chances are that you’ll need some financial help in order to make that a reality. When you do your research and have considered all of your options and how they will impact you and your business, making the decision to seek a loan in order to afford your commercial real estate can allow your business to take off.