Finance Commercial Real Estate with an SBA 7(a) Loan
Commercial real estate: a big topic and a big purchase. Most small business owners need financing for commercial real estate — whether it’s buying property, expanding, renovating, or building something new. While you have many financing options, a small business owner (or an aspiring one) can accomplish their goal with an SBA 7(a) loan from the right lender. Here we’ll explain why an SBA 7(a) loan is the way to go — and how to choose a lender that’s right for you.
SBA 7(a) loans for commercial real estate
Designed specifically for small business owners, a flexible SBA 7(a) loan can finance all things commercial real estate. With it, you can buy a building or build a new one. The loan covers construction materials, renovations, expansions, refinancing, and other related needs.
Plus, the features are hard to beat:
- Borrow up to $5M1
- Repayment terms of 10 to 25 years1
- Not dependent on collateral
- Not reflected on your personal credit report
- No balloon payments
Choosing a lender
Though many aspects of the SBA 7(a) loan are regulated, not all lenders will be a good fit for your business. Let’s take a look at some key considerations for choosing one.
To begin with, you can’t get an SBA 7(a) loan from the Small Business Administration directly (as some believe). This kind of loan can only be funded through an SBA-approved bank or authorized non-bank lender.
On top of that, some lenders are SBA Preferred Lenders — meaning they’re experts in SBA 7(a) loans and make their own credit decisions. For small business owners, this is great news. It means you won’t wait up to four weeks for the SBA to approve the loan.
Most SBA 7(a) terms and conditions are set by the SBA and won’t change from lender to lender. But here’s our checklist (and tips) for finding the best SBA 7(a) lender for you.
Rates
Lenders set their interest rates independently, but cannot exceed the SBA maximum. Make sure to compare rates and get one you’re satisfied with.
Fees
There are fees the SBA sets that may change annually. Fortunately, many common lender fees are prohibited (processing fees, origination fees, and more). We recommend checking with your potential lender to get a full, transparent list of their fees.
Reputation and customer service
Read reviews and testimonials for your potential lender online. Also, talk to other small business owners. They’ll likely have a recommendation for or against a particular lender
Experience and expertise
Are they an SBA Preferred Lender? If so, you can trust that they’re experts who have been vetted by the Small Business Administration. Plus, they can make their own loan decisions and the process can go much faster for you.
Loan terms and requirements
An SBA 7(a) loan for commercial real estate is eligible for the full 25 years. Work with your lender to establish the terms that are right for you.
Turnaround time for approval
You already know what we’re going to say: are they an SBA Preferred Lender? If so, expect a faster decision.
We wish you the best and we’re here for you
With amounts up to $5M and terms up to 25 years, a flexible SBA 7(a) loan can help you accomplish your commercial real estate goals.
Still, it’s important to carefully research lenders before choosing one. Return to our key considerations and checklist above for guidance.
At Fund-Ex Solutions Group, we’re proud to be one of only 14 non-bank SBA Preferred Lenders. Our team of experts would love to discuss your needs and whether an SBA 7(a) loan is right for you. Contact us to get started.
Other posts you may find helpful:
What You Need to Know about the SBA 7(a) Loan
Busted: 6 Myths about the SBA 7(a) Loan
1Terms subject to credit approval upon completion of an application. Loan sizes, interest rates, and loan terms vary based on the applicant’s credit profile. Finance amount may vary depending on the applicant’s state of residence. Call 866-297-4311 for complete program details.
