In this episode, we talk about putting together a loan request summary and best practices while shopping for loans for your development projects.
Two types of SBA loans: 504 and 7a
Though CDC/504 loans tend to be conflated with real estate, they are really designed for anything that you log under “property, plant, and equipment.” This means you can use them for purchasing or renovating commercial real estate or for purchasing equipment.
These are some eligible uses for SBA 504 loans:
The purchase of existing buildings
The purchase of land and land improvements, including grading, street improvements, utilities, parking lots and landscaping
The construction of new facilities or modernizing, renovating, or converting existing facilities
The refinancing of debt in connection with an expansion of the business through new or renovated facilities
The purchase or upgrade of equipment and machinery
You can’t use an SBA CDC/504 loan to refinance pre-existing debt or for working capital, so if you’re looking for a more versatile loan, then consider the SBA 7(a) loan program.
While you can choose to earmark funds toward purchasing land or buildings, you can also use a 7(a) loan for business renovations, building out a leased property, capital expenditures like meeting payroll expenses, and to help with everyday operating costs.
The funds from an SBA 7(a) loan can be put toward any of the following uses:
Expand, acquire, or start a business
Purchase or construct real estate
Refinance existing business debt
Provide working capital
Construct leasehold improvements
Dylan is a principal of The Requity Group, a real estate investment company focused around the acquisition and operation of mobile home parks, and multifamily real estate.
He has been a principal on over $50M in real estate transactions over the last 4 years.
Trying to decide what type of loan is best for your business can be confusing.
With all the rules, guidelines, and regulations, it’s easy to get overwhelmed.
But with the right information, you can confidently choose the best loan program for your specific business needs.
An SBA 504 loan is commercial real estate financing for owner-occupied properties. These loans require only a 10 percent down payment by the small business owner and funding amounts range from $125,000 to $20 million and sometimes more. The SBA piece can go up to 5.5 million and the senior loan can be upwards of 20 million. There are a lot of ways to structure these loans
On the other hand, SBA 7a loans can be used to buy a business or obtain working capital. The maximum loan for an SBA 7a loan amount is $5 million.
To schedule a call or for more information please visit https://sbaexchange.com/
In this episode, we talk about the importance of working with an experienced commercial mortgage broker. A good broker will help you find the best financing available in the market. They will educate you on available programs and be the first set of eyes on any deals as a pre-underwrite to help you evaluate the opportunity.
Diego Corzo “house hacked” his way to financial freedom. He bought his first property, lived in the master bedroom, and rented out the other rooms. He’s never paid his mortgage “out of pocket.” His roommates did. Learn how he systematically purchased one property at a time to create financial independence by creating huge cashflow with shared housing just like his first house. If you’re looking for some inspiration and direction on how to get started with house hacking, Diego is a true inspiration. He started investing at 23. He had a solid IT job right out of college and lived in Austin, Texas. By 26, he was able to quit his W2 job and embark full-time on his real estate investing business. Watch this episode of the Investor Financing Podcast to learn all about house hacking your way to financial freedom.