Conventional OORE vs SBA OORE Loan: Let’s Find Your Best Option

June 11, 2025

As your business grows, there may come a time when you need to invest in a permanent location for your team to work together, provide products or services, and best serve your customers. The question is: How should you finance a new real estate acquisition?

Two of the most common types of business real estate financing options are a conventional owner-occupied commercial real estate loan and a Small Business Administration (SBA) loan. Either option can be beneficial for companies in the Southeast Texas Gulf Coast region.

Understanding the differences, benefits, and application process for a conventional OORE vs. SBA OORE loan can help you determine what best aligns with your business goals. Texas Gulf Bank is here to guide you through this important decision-making process.

What is a Conventional OORE Loan?

A conventional owner-occupied commercial real estate loan offers business financing through traditional lenders, such as our bank. These loans are tailored to the needs of business owners looking to purchase commercial property for their primary business use.

Conventional loans often work well for borrowers with significant assets or a strong financial history who are looking to capitalize on new growth opportunities.

The key to pursuing this option is that your business must occupy at least 51% of the physical space. Then, you can use the remaining portion to rent to other companies, providing additional cash flow opportunities.

What is an SBA OORE Loan?

An SBA OORE loan is offered through the U.S. federal government’s Small Business Administration loan program. The Small Business Administration (SBA) is a federal agency dedicated to encouraging small business growth by making financing options more accessible, especially for growing companies and established businesses.

Their primary way of supporting businesses is by partnering with banks, such as Texas Gulf Bank, to provide an SBA loan guarantee on a portion of the loan amount to eligible small business owners.

Because the government partially guarantees SBA loans, you may realize more favorable loan terms if you qualify. These loans are designed to support small business owners who may face challenges qualifying for traditional financing.

Types of SBA Loans for OORE Financing

There are two common types of SBA loans suitable for owner-occupied commercial real estate:

SBA 504 Loans: This SBA loan is specifically designed to finance fixed assets, such as the purchase or renovation of commercial real estate.
SBA 7(a) Loans: This SBA loan is a versatile option that can be used for various business purposes, including real estate purchases, renovations, or expansions.

Comparing Conventional OORE vs SBA OORE Loan Options

Let’s further explore key factors to consider when choosing between these two loan options.

1. Loan Amounts and Terms

Conventional OORE Loans: These loans typically provide larger loan amounts for high-value properties but may require shorter repayment terms.
SBA OORE Loans: SBA loans offer smaller loan amounts for small business owners. However, repayment terms may be longer, which helps reduce monthly payments.

2. Cash Flow and Working Capital

Conventional OORE Loans: A traditional loan prioritizes credit scores and financial track record, which can be restrictive for small businesses that may not have had sufficient time to build history and prove viability.
SBA OORE Loans: The SBA guarantee helps reduce down payment requirements, leaving more cash flow for maintaining operations or pursuing growth opportunities.

3. Interest Rates

Conventional OORE Loans: Interest rates for these loans can be competitive but often vary based on the borrower’s creditworthiness.
SBA OORE Loans: Interest rates for SBA loans tend to be lower and more predictable due to government backing, offering potential cost savings over time.

4. Application Process

Conventional OORE Loans: We work to provide a streamlined application process with clear requirements. Your approval is determined by providing a complete application, proof of financial history, and other business factors.
SBA OORE Loans: You’ll need to meet various criteria, including an acceptable business plan and adherence to SBA size standards. The process can take longer, but our dedicated team of SBA specialists can help you navigate the process step-by-step.

5. Flexibility for Business Owners

Conventional OORE Loans: These loans are ideal for established businesses looking to take advantage of their proven track record to expand their physical footprint.
SBA OORE Loans: SBA loans are a great option for small businesses that need flexibility to support business expansion plans. Funds can be used to cover real estate and additional needs, such as equipment or renovations.

Factors to Consider When Choosing a Loan

Selecting the best type of loan for your business includes evaluating various factors, including cash flow, loan amounts, monthly payments, and loan requirements. Business owners should also prepare a thorough business plan and complete a loan application.

At Texas Gulf Bank, we understand how critical financing is for the success of your business. Choosing between conventional and SBA OORE loans may seem challenging, but our experienced team can help you evaluate your options and guide you toward the best solution.

We work with companies throughout the region to support their business needs. We encourage you to connect with our local lenders to determine the ideal lending solution to help your business grow.

Our personalized, relationship-based approach allows us to better understand your unique circumstances so that we can tailor the right loan solution for you.

Get Started Today with a Conventional or SBA OORE Loan

Whether you’re drawn to the flexibility of an SBA loan or the streamlined lending approach of a conventional loan, Texas Gulf Bank is here to support your needs. Our team is ready to guide you through the process and answer your questions.

Contact us today to explore your loan options and receive personalized advice on a conventional OORE vs SBA OORE loan for your business. We’re ready to help your local business thrive.

All loans subject to credit approval.