SBA 504 Loans: Owner Occupied Real Estate

The first requirement to an SBA 504 loan is that the property needs to be owner occupied; meaning the business requesting the loan will occupy a minimum of 51 percent of the property. If you are constructing a new building you must occupy even more of the property in order to qualify for the SBA guarantee. For small and medium-sized businesses, the decision to seek owner occupied financing is a significant business decision because of potential dangers; such as over-leveraging your business. Some things to consider are as follows:

1. Will you lease excess space in your new building?
2. Determine and evaluate your future space needs.
3. Consider potential tax consequences.
4. Establish realistic projections that support debt service coverage.

The business owner should fully evaluate and weigh options for 504 financing. Hoffman Consulting Group can help you determine and find the best lending institution to fit your specific business needs. Owning your own building can go a long ways in building long term equity in your business. In addition, business owners have more control over their expenses and can take advantage of depreciation to shelter and protect income. Remember to take your time and think it through. Understand the angles so you can make the best decision for your needs.

We are now a wholesale lender for SBA 504 loans. What this means to you is that it doesn’t cost you anything additional to work with us on this loan type. We have a couple of direct relationships that pay us for preparing and bringing these loans to them. You will receive all the consulting advantages without an additional expense compared with going directly to the bank yourself.

We are looking for new construction, refinances and purchase deals. If you do or will occupy 51% or more of the property we want to visit with you. We are not afraid to compete. If you are already working with another lender, let us put our bid in the decision process. We are that confident we can be competitive in rates and terms.

SBA 504 loans can be difficult to understand. Let us guide you through the process and protect your interest at the closing table.

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