SBA Financing Including Real Estate

by a searcher from The University of Michigan - Stephen M. Ross School of Business

1 year ago

Question about how SBA loans work when combining real estate with the business.

1) If there is a combined Business + Real Estate opportunity - do lenders a single loan for a longer period###-###-#### years)? Or, are we looking at two separate loans, one for the business with 10 year term and another for the real estate at a longer term?
2) I also heard that if the real estate is worth more than 50% of the total business opportunity, the period becomes 25 years (for a combined business + real estate loan).

Any input here would be much welcome! - Thank you in advance.

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10 comments

searcher from The University of Michigan - Stephen M. Ross School of Business

Thank you all! This is very informative. I will reach out as soon as I get a little closer to wrapping up the deal.

1 year ago | like reply | 0 likes

intermediary from California State University, Northridge

Brad has good insight above. The only thing I'd add is to contact a real estate broker to get a broker's opinion of value on the real estate from a sale-leaseback perspective. Doesn't cost you anything, but can show you what the numbers would look like if you split up the RE and the business and only sold the RE (for a profit of course). Real estate sells on Cap Rates - even at a conservative 8% Cap Rate, that's selling the lease for a 12.5x multiple. DM's open if you want more info

1 year ago | like reply | 0 likes

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