SBA 7(a) & Real Estate

by a searcher from Bentley University

4 months ago

Hi All,

Can someone give me a quick "rundown" (... get The Office reference...) on how the SBA 7(a) program works with a real estate transaction?

Assessing a self storage listing, and hoping to understand the loan dynamics and underwriting requirements, anticipated rates - ideally fixed - etc.

Thanks,
Andrew

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lender from Eastern Illinois University

I would be more than happy to jump on a call to discuss this in more detail. You also have available the SBA 504 loan program for real estate transactions. But to summarize the basics on the SBA 7A side, if the property is special-use then typically the maximum you can finance is 85% of the purchase price. For non-special use properties the maximum is 90% (without seller carry involved). When real estate is involved in an SBA 7A transaction, if the real estate is 51% or more of the total project cost, then the SBA 7A loan is amortized out over 25 years. If the business assets are 50% or more of the acquisition cost, then you get a blended amortization on the loan. The Bank assigns 10 years to the business assets and 25 years to the portion of the deal that is real estate related, and you end up with an amortization on all of the debt between 10 and 17.5 years. Usually the blended amortization will save you between 5% and 15% in monthly debt service versus doing the two loans separately depending on how much of the project is real estate related.

If you have additional questions on SBA financing you can check out this page on our website.

https://www.commerciallendingx.com/sba-loans-explained

You can also reach me directly at --@----.com Good luck.

3 months ago | like reply | 0 likes

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