SBA Commercial Real Estate Loans

The Small Business Administration (SBA) offers several commercial real estate loan options for buying or expanding property. As SBA lending experts, Live Oak Bank can help you navigate financing options for your needs. The SBA’s two popular loan programs, 7(a) and 504, each offer unique benefits for buying a business depending on the type of facility, business and funding structure needed. We break down the fundamental differences between the two programs below, and it’s always best to speak directly with a lender to discuss your own unique business goals.

 

When would I use an SBA 7(a) loan?

The SBA 7(a) loan program can be used for a wide variety of business needs – from new construction, acquisition and expansion to working capital and refinancing existing debt. A 7(a) loan would be suitable when the borrower is purchasing a business, along with commercial real estate and working capital. SBA 7(a) loans can allow for working capital and interest reserves to help cover payments between lease-up in certain project types.

Live Oak has Preferred Lender Status (PLP) with the SBA for the 7(a) loan program, which gives us authority to make final credit decisions without having to get SBA approval. This means that our borrowers receive their loan in an expedited process.

 

When would I use an SBA 504 loan?

The SBA’s 504 program can be used to finance new construction or acquisition of commercial real estate or large equipment purchases for small businesses. Working capital and interest reserves after certificate of occupancy must be covered by the borrower.

 

How does the cash flow of the business affect the commercial real estate loan?

Live Oak focuses on the cash flow of the business. When it comes to commercial real estate loans, Live Oak is much more concerned with the underlying cash flow of the business versus the value of the underlying real estate.

 

How can I determine which SBA loan program works best for me?

While independent research and education is important, Live Oak encourages you to speak with a lender. After discussing your goals and better understanding your business, one of our loan experts can guide you on a path to the best SBA loan program. To learn more about commercial real estate acquisition, reach out to a Live Oak lender and get the conversation started.

 

This table breaks down the differences between the SBA's 7(a) and 504 loan programs when it comes to commercial real estate loans.