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Your Guide to SBA Owner Occupied Commercial Real Estate Financing

February 7, 2024

Many small businesses find it easier to start out renting a commercial property so they can focus on building a customer base and bringing in steady revenue. When exciting growth happens, however, it may be time to own your own space.

Over time, your business may need to relocate because you’ve outgrown your rental space, you’re facing a significant hike in rent, or you want more freedom to operate your business without landlord restrictions.

If your business is poised to transition from renting to property ownership, you will need access to reliable, sufficient financing to make it happen. For small businesses who have been unable to secure conventional financing, it’s often a good idea to start with financing through the Small Business Administration (SBA).

Learn about the different lending options through the SBA and discover how your business can begin the loan process for SBA owner occupied commercial real estate through Texas Gulf Bank.

SBA Loan Options for Small Businesses in Texas

The SBA is a federal agency dedicated to supporting small business growth and job creation by offering different business financing options. They guarantee a percentage of the loan amounts of small business loans to make them more available to businesses in need.

With SBA loans, your business can start on the path to acquiring assets needed for long-term growth and success, including owner occupied commercial real estate.

Owner occupied commercial real estate enables your business to fully own a commercial property in which you occupy at least 51% of the property. Pursuing an owner occupied commercial site empowers your business in a key number of ways. You may benefit in the following ways:

  • Generate rental income from the unoccupied portion of your property.
  • Utilize your property according to your business needs.
  • Support long-term plans to expand and renovate as needed.
  • Build equity in the property value.
  • Improve cash flow.
  • Eliminate the risk of rising rent.
  • Relocate to a better target market for your business.

To support businesses, the SBA offers two different loan programs tailored to meet the diverse needs of small businesses: the SBA 7(a) loan and the SBA 504 loan. Find out which one best fits your situation.

SBA 7(a) Loans 

An SBA 7(a) loan is the most popular SBA loan option for business owners because of the built-in versatility of how funds may be used to support growth initiatives. They can be used to purchase owner occupied commercial real estate and cover other key expenses, such as:

  • Renovating existing office buildings
  • Purchasing business tools, machinery, and equipment
  • Acquiring building furniture, fixtures, and inventory
  • Funding working capital
  • Refinancing current business debts
SBA 504 Loan 

The SBA 504 loan program is the ideal lending option for small business owners who need funding solely for major fixed assets, including real estate purchases. In addition to purchasing commercial land, SBA 504 funds may be used to cover expenses such as:

  • New facility construction
  • Existing commercial buildings
  • Long-term machinery and equipment
  • Road and utility improvements

Unlike an SBA 7(a) loan, SBA 504 loan funds may not be used for other kinds of working capital needs or business purchases like furniture or inventory. However, since 504 funds are intended for larger purchases, they typically include higher loan limits.

Experience the Benefits of SBA Loans

In addition to providing access to necessary capital for real estate purchases, SBA loans offer a wealth of distinct advantages compared to conventional loans. Borrowing businesses can typically enjoy benefits such as:

  • Lower down payment requirements
  • Extended repayment terms
  • Loan fund versatility
  • Financial support for growing businesses

Unlike traditional loans, SBA loans typically require smaller down payments to qualify for loan approval, and their extended repayment terms offer businesses the chance to have more manageable monthly payments. This setup can help strengthen the cash flow of borrowing businesses, allowing you to allocate more financial resources to other growth initiatives.

Choose Texas Gulf Bank for SBA Loan Needs

Applying for an SBA loan is a bit more complex than pursuing a conventional bank loan, so we recommend working with a lending partner who understands the SBA loan process. The SBA Loan Specialist at Texas Gulf Bank can help you navigate each step of SBA financing to ensure a successful and seamless loan process.

Our SBA loan specialist Dennis David has extensive experience guiding clients through all parts of the SBA loan process, including:

  • Confirming your business meets SBA eligibility requirements
  • Determining the best SBA loan option for your specific needs
  • Creating the ideal loan structure that fits your business need
  • Gathering and preparing all required business and financial documentation
  • Reviewing the loan application for accuracy

With over 110 years of experience serving businesses across the Southeast Texas Gulf Coast, we understand the unique financing needs of business owners and pride ourselves on being a trusted lending partner for local businesses looking to grow.

Discover Your Options for SBA Owner Occupied Commercial Real Estate

Choosing Texas Gulf Bank for your business banking needs is a great decision for today’s small business owners. You’ll gain access to expert guidance and resources, tailored solutions designed to help you achieve business goals, a streamlined application process, and exceptional customer service every step of the way. 

To learn how your business can begin the loan process for SBA owner occupied commercial real estate through Texas Gulf Bank, get in touch with us today:

Experience the Texas Gulf Bank difference in supporting the growth of your business. We are committed to your success.

All loans subject to credit approval.

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