Commercial real estate loan option for small businesses

A business owner in Delaware who is interested in purchasing, refinancing or renovating commercial real estate may be able to qualify for the Small Business Administration’s 7(a) Loan Program. The government loan program allows small business owners to borrow up to 90 percent of the cost of their investment, or as much as $5 million.

Qualifying for an SBA loan may be easier than qualifying for other types of commercial real estate loans. When an applicant is being considered for an SBA loan, the business’ projected income may be factored into the decision. Other lenders will often only consider a business’ historic income when making a credit decision. The program also offers repayment terms to borrowers that can be up to 25 years.

When a small business owner qualifies for an SBA loan, the SBA does not actually loan the money directly. Instead, the SBA works with its lending partners to structure a loan using SBA guidelines. The SBA also makes a guarantee to the commercial lender for a portion of the loan amount. In this way, the commercial lender takes on less risk, and the borrower is able to secure a loan with more flexible terms.

A small business owner who is thinking about investing in a piece of commercial real estate might want to talk to a lawyer about whether or not they would qualify for an SBA loan. A lawyer may be able to help the small business owner to understand all of their financing options and then assist in the preparation of the commercial real estate loan application package.



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