Loan options for commercial real estate acquisition

searcher profile

June 08, 2022

by a searcher in San Diego, CA, USA

I've been presented with an opportunity to purchase a commercial property, but only the physical structures are included in the deal. The land that they are sitting on is leased for a 96 year term. Would something like this still be eligible for an SBA loan under the 7a or 504 programs?

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commentor profile
Reply by a lender
from Clemson University in Reston, VA, USA
It is eligible we did an Ice skating rink at my previous bank through SBA there was a ground lease from the county for 50 years. Colin is accurate on the language have a land use attorney look at the lease agreement bc there may be language that says that the county or municipality may take possession of the land at any time and if you have that business, you are out of business.
commentor profile
Reply by a lender
from University of Missouri in St. Louis, MO, USA
Adam, is it owner occupied? The likelihood is it would be eligible but there is often language in the land lease that conflicts with SBA requirements (especially true with Fed Govt land leases). If the owner of the property is amenable to possibly changing some wording on the land lease, then it should be SBA eligible.
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