Commercial Real Estate: Why Now Is The Time To Buy

Our economy is turning the corner, albeit slowly and cautiously. Even so, as a result of these economic times, now may be the best financing available to businesses.

Does your business currently lease its operating facility? Ever thought of buying, instead? 

There’s no better time than now. 

Let’s take a look at one option; the Small Business Administration (SBA) 504 loan program. The Small Business Administration (SBA) 504 loan is a three-way partnership that includes the business borrower, the bank and the Small Business Administration. It is available to help a business either purchase or refinance commercial real estate—as well as other long-term assets, such as manufacturing equipment.

Currently, 20-year fixed rates are 4.591 percent! Historically low rates, coupled with the recent allowance to refinance existing commercial real estate under this program, makes the SBA 504 loan one of the most attractive financing options available. Rather than traditional bank financing, this loan structure requires a much lower down payment (10 percent) along with a fixed, below-market interest rate. Not only can a Borrower afford the financing they need to buy, build or refinance, but they also keep more cash for business expansion.

A real estate purchase with a fixed-rate SBA 504 loan also mitigates inflationary rate risk and offers a lower, more predictable occupancy cost.

With SBA 504, a borrower will have two permanent mortgages: one with the bank for 50 percent of the total financed amount and one with the SBA for 40 percent of the total financed amount. Hence, the Borrower’s contribution to the entire project is limited to the remaining portion of 10 percent, which, if refinancing, may even be in the form of existing equity. 

If your business has ever considered owning its operational facility, there's no better time to consider buying commercial real estate than the present.