real estate with business

If you are doing conventional financing than the real estate is going to be purchased separately from the business. If you are doing SBA 7A financing, then there is the option to combine the real estate into the business purchase. If the real estate is 51% or more of the total cost (with any working capital funded in the transaction going into the business cost), then you can finance both the business purchase and real estate over 25 years. If the business purchase is 50% or more of the transaction, then you can finance both together and use a blended amortization where 10 years is assigned to the portion of the debt that is business related and 25 years is assigned to the real estate piece, and you end up with a blended amortization somewhere between 10 and 17.5-years. Doing a blended amortization will typically create a 5 to 15% cash flow savings over doing both together (due to being able to push out the amortization on the business acquisition portion of the debt).

However, you have to be doing an asset purchase on the business in order to get an amortization above 10 years. If you are doing a stock purchase on the business, the SBA has this new clause in the updated SOP that says a stock purchase cannot be more than 10 years in term. So in order to get a 25-year term on the real estate, you would need to do the real estate and business acquisition in separate loans. The hope is this rule will change in the future, but for now we have to live with it.

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Are you asking about SBA 7(a) specifically or more generally? In which case, the broadly correct answer is the fun old: it's going to depend. You may see any of these (as well as others); 1. two separate loans, one for RE, the other for "personal property" (biz assets); 2. single, integrated loan facility or 3. one facility, but with designated tranches, one of which may have its own RE terms. Glad to chat further on it, good question.