Why Should a Business Owner Choose SBA Financing for Real Estate

Business Finance
Why Should a Business Owner Choose SBA Financing for Real Estate

Published: November, 2018

Tired of paying rent and wanting to own your own business facility? SBA loans offer many benefits for borrowers seeking SBA lending verses traditional bank lending, including assistance with financing small business real estate. By using SBA financing for real estate, businesses can build equity with the payments made over time, own the real estate, and gather an additional set of revenue from market appreciation when it’s time to sell the business. Seven other reasons why borrowers typically go for an SBA lending program are:

  1. Seeking Financing After a Long-Term Bank Relationship. If a borrower has had a long-standing relationship with a bank officer who is no longer available, securing financing to buy small business real estate can be incredibly difficult with traditional bank lending.
  2. Banks Require Large Down Payments. Often traditional bank lending requires a large down payment. If a business owner is looking to keep money in the business to grow the business, going with SBA financing for real estate is a great option because SBA loans typically ask for a much lower down payment.
  3. Some Banks Require Extra Collateral. For borrowers who do not have the collateral required from most banks for traditional lending, SBA lending doesn’t require as much collateral and the loan request isn’t declined solely on the basis of inadequate collateral.
  4. SBA Financing for Real Estate Helps Owners Avoid Renewal Risks. SBA loans provide permanent, long-term financing (25 years for small business real estate loans). Most traditional bank lending typically offers only temporary financing, requiring small businesses to re-qualify and refinance the loan in the future, which can prove to be inconvenient and incur possible renewal risks.
  5. Bank Ownership and Policy Changes. Small business owners can often find themselves in a precarious situation when banks change ownership or alter policies that affect the types of loans they want to offer.
  6. Not A Lot of Financial Experience. SBA loans usually have easier qualifying criteria; perfect for a borrower who is applying for lending for the first time or who hasn’t had much financial experience.
  7. Financing for Legitimate Use. Financing with an SBA loan can cover any legitimate business uses, even if it’s not just for buying or closing the real estate property. SBA loans are more lenient to cover additional expenses or financial needs such as moving expenses and remodeling purposes.

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