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SBA loans offer the best terms for owner-occupied commercial property. Learn exactly how to qualify and navigate the application process.
Key Takeaways
SBA loans are government-backed financing programs that offer some of the best terms available for commercial real estate:
The tradeoff? SBA loans require owner-occupancy, have stricter qualification requirements, and take longer to close. But for qualifying borrowers, they're often the best option.
Complete guide to SBA loan programs →
$28.5B
in SBA 7(a) loans approved in fiscal year 2023
10-20%
typical down payment for SBA commercial real estate loans
25 years
maximum term for SBA 504 real estate loans
$5.5M
maximum SBA 504 loan amount for most projects
SBA 504: Best for purchasing real estate or heavy equipment. Lower rates, but requires working with a Certified Development Company (CDC). Great for pure real estate purchases.
SBA 7(a): More flexible—can include working capital, inventory, and mixed-use purposes. Higher rates than 504, but simpler structure. Better for complex deals or when you need additional capital.
Before investing time in an SBA application, confirm you meet these basic requirements:
SBA loans require comprehensive documentation. Having everything ready before applying significantly speeds up the process.
Not all banks are equal when it comes to SBA lending. Look for:
Banks with Preferred Lender Program status can approve loans without sending each one to the SBA for review. This significantly speeds up closing (weeks instead of months).
You'll work with two lenders: a bank (for the first mortgage) and a Certified Development Company (CDC) for the second mortgage. The CDC typically coordinates the process.
The SBA loan application process typically follows these stages:
Total timeline: 60-120 days is typical for SBA loans. PLP lenders can sometimes close in 45-60 days.
SBA underwriters look closely at these factors:
The primary question: Can the business support the loan payments? Lenders typically require:
SBA loans are secured by:
Lenders want to see that owners have relevant experience to run the business successfully. A strong resume and business plan help here.
| Requirement | SBA 504 | SBA 7(a) |
|---|---|---|
| Down Payment | 10-15% | 10-20% |
| Maximum Loan | $5M (CDC portion) | $5M total |
| Interest Rates | Fixed (below market) | Variable or fixed |
| Term (Real Estate) | 25 years | 25 years |
| Credit Score | 680+ preferred | 680+ preferred |
| Owner-Occupancy | 51%+ (60% new construction) | 51%+ |
| Timeline | 75-120 days | 60-90 days |
Clear House Lending works with SBA Preferred Lenders across the country. Share your scenario and we'll connect you with lenders experienced in your property type and industry.
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