Tenant Improvement Loan

Often when looking for a business location you will find the space will need tenant improvement’s (TI) to customize it for your needs. Sometimes the landlord will offer you some incentives toward the TI expense; however, many do not leaving the expense to you. Some TI expenses can range from a few thousand dollars to hundreds of thousands. This will be an important part of your location decision.

Loans for TI expenses do not excite many lenders. Lenders will typically not assign a collateral value to the TI expenses unless there is furniture, fixtures, or equipment that can be assigned a liquidation value. Lenders will try to mitigate the collateral risk of a TI loan with an SBA guarantee.

Keep in mind that SBA will require a minimum of 10% down on the total project budget. You can motivate the lender to approve your loan by putting a larger down payment. The lender will also be more willing to issue a TI loan for an established business that has a strong performance record. Lenders will also consider start up franchises due to the proven business model. Every loan is unique so don’t count yourself out until you consult an expert.

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