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SBA Loans and How the SBA 7a Can Help Finance 100% of Your Project

06 Jul Posted by in SBA Loan | Comments
SBA Loans and How the SBA 7a Can Help Finance 100% of Your Project

Which SBA loan requires the lowest amount of down payment for me or my client? That’s the number one question I get asked. Any existing business buying or constructing multi-purpose, also called general purpose commercial real estate can and should apply. Office or warehouse space, retail space, office condos, anywhere in the nation except Hawaii can get SBA loan approval. Here are the requirements.

Requirements For SBA Loan (7a):

  • Business must have been operating for minimally two years
  • Must show ability to repay debt 1.15x for the last fiscal year plus interim period
  • SBA loan requires 10% equity injection

For Example:

$1,000,000 Real estate purchase

$300,000 Purchase furniture, fixtures, equipment, moving expenses

$30,000 SBA loan guaranty fee

+$20,000 Closing costs

Total:

$1,350,000 Project costs

Equity injection 10% = $135,000

SBA loan amount = $1,215,000

You or your client will have to come up with $135K. If done conventionally, the bank would finance 80% of the purchase and none of the other expenses, and your client would be out of pocket $550K.

With the SBA loan, not only does this greatly reduce their actual out of pocket expenses, it allows them to invest TIME to build equity in the real estate rather CASH. Add value to your consulting business and help your partners or your clients preserve their capital!

The 100% LTV financing option allows all expense related to the project to be considered. We are essentially financing 90% of the project COSTS

 


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