Small Business Loans

[Tyler Beley]

Has anyone ever had experience taking out a Small Business Loan (SBA) for their LLC then using those funds as a down payment for a mortgage to buy a property? This would allow the borrower to avoid using any of their own money. Is this a realistic way to borrow?

[Scott Snow]

I have written about this question on another post but that is not the intent of SBA program. SBA loans are for owner-occupied commercial real estate on the 504 loan and the 7a loan is for owner occupied real estate, equipment, and other business related activity debt. SBA funds are not for working capital that gets used to invest in passive real estate house transactions. People probably try to get working capital but you need to show you have a legitimate business that is operating and need operating capital for specific reasons, not diverting into an investment purchase of a house. Startup funds are still fairly difficult to get one way or another under SBA and that use of funds is not eligible.