How to Buy a Business and Commercial Real Estate with One SBA Loan (Without Overextending Your Cash)
Buying a business is a proven path to financial independence, but the real wealth is created when you also own the building the business operates in. Most entrepreneurs don’t realize that the SBA allows you to purchase both the business and commercial real estate using a single loan—often with as little as 5–10% down.
This strategy, shared on the Investor Financing Podcast, is one of the most powerful ways to build long-term wealth through business ownership. By combining cash-flowing operations with appreciating real estate, you can create multiple income streams while minimizing out-of-pocket risk.
Here’s a step-by-step breakdown of how this SBA strategy works and how you can use it to accelerate your wealth-building journey.
Step 1: Determine If Buying the Business and Building Makes Sense
The first step is evaluating whether the deal supports purchasing both the business and the real estate together. In many cases, sellers offer the opportunity to acquire both, but buyers don’t always know how to structure it properly.
An SBA analysis looks at:
- The purchase price of the business
- The purchase price of the real estate
- Cash flow from historical tax returns
- Whether the deal supports long-term affordability
If the numbers work, buying both assets together can dramatically improve your financial position from day one.
Step 2: Meet the 51% Owner-Occupancy Rule
The SBA requires that your business occupy at least 51% of the building to qualify for owner-occupied commercial real estate financing. This rule is what unlocks the biggest advantage of this strategy: 25-year amortization.
That longer term lowers your monthly payments and improves cash flow immediately. Even better, you can lease out the remaining 49% of the building to other tenants and use their rent to help cover your loan payment.
Step 3: Structure the Loan the Right Way
Once the deal qualifies, the loan can be structured in one of two ways:
Option 1: SBA 7(a) Loan
This is the most common and simplest option. It allows you to finance the business and real estate in one loan, often with up to 90% financing and a 25-year amortization if real estate is the majority of the deal.
Option 2: SBA 504 + SBA 7(a) Combo
In some cases, buyers use a 504 loan for the real estate and a 7(a) loan for the business. This can reduce interest rates on the property portion and works well for larger or more complex transactions.
A side-by-side analysis determines which structure offers the best long-term outcome.
Step 4: Use High-Leverage SBA Financing to Minimize Cash Out of Pocket
One of the biggest misconceptions about buying commercial real estate is that you need a large down payment. With SBA financing, that’s often not the case.
If the business cash flow can support the new debt (with a minimum 1.15 DSCR), the SBA may allow:
- 90% loan-to-cost financing
- 10% total equity injection
- Seller financing for 5% of the down payment
- Buyer cash as low as 5%
This allows you to acquire a business and property with minimal capital while still maintaining financial stability.
Step 5: Create Additional Cash Flow by Leasing the Extra Space
This is where the strategy becomes even more powerful.
As long as your business occupies 51% of the building, you can lease out the remaining 49%. That rental income can:
- Offset most of your loan payment
- Reduce personal risk
- Improve monthly cash flow
- Potentially allow you to operate rent-free
In many deals, tenants help pay down your loan while you build equity.
Step 6: Build Long-Term Wealth Through Ownership
When you own both the business and the building, you benefit from:
- Long-term real estate appreciation
- Loan principal paydown
- Powerful tax deductions and depreciation
- Control over your occupancy costs
- Multiple income streams
Over a 30–40 year period, this combination has historically created significant wealth for business owners who use the strategy consistently.
Step 7: Take Action and Explore Your Options
Not every business purchase includes real estate, but when it does, this SBA strategy can be a game-changer. Even if you’re just exploring opportunities, understanding this option gives you a major advantage in negotiations and deal structuring.
If you’re serious about building wealth through business ownership, start by speaking with an SBA expert who can analyze your deal and show you what’s possible. The right structure can turn a good business purchase into a life-changing investment.