All Forum Posts by: Scott Snow

@John Weir . SBA financing would be a great fit for a self-storage facility. I work as an SBA lender that can do National SBA loans on commercial real estate such as this. The typical down payment for a deal like this would be 10% on a 504 loan. You may be asked to inject more depending on variables of the deal. You can ask for seller carry back but for it to count as equity it would have to be on full standby (no payments) for a min of 2 years. The other aspect of a deal like this is operator experience. Industry experience is needed to be considered when running a 220 unit facility. Does it have on-site management living area or how will it be managed? What are the traffic counts and marketability for the location? All things to consider. You can PM for more questions or info you may need on SBA.

@Spencer B.

SBA financing is for owner-occupied CRE meaning a business will occupy 51% of the building they are buying. This is one of the various requirements for SBA. SBA allows for 10,15,20% for a down payment depending on the property type and if the business is new or not. The loans are fully amortizing loans up to 25 years on commercial. Many conventional loans will have balloon payments after 10-15 years or less. SBA provides a bank a guaranty to allow them to do higher risk lending for startups, new locations, higher leverage deals, etc. This is why many new franchise locations are financed this way. The goal of SBA is to help grow small businesses and not do investment financing.

Buying a franchise and franchising are two different scenarios. Buying a franchise from a Platos closet will be easier than trying to start your own which will require you to have a successful business that you are now trying to grow and franchise out to other potential owners. Lot's of compliance stuff to deal with to do that.

Strip malls can sometimes fit SBA if your business occupies 51% to meet eligibility. You could lease the rest of the space.

You will need a business plan, projections by month in the 1st year and annual 2nd year. The franchise will help you with all of this. You will also provide personal financial information to see what support or lack thereof you provide to the business. Your management will be assessed along with your character. Again franchises help with this because they have training programs that help with weaknesses in industry experience.

There is much to discuss and consider when getting a business loan and SBA loans but I can help you navigate it more. Let me know if you need more help or how I can help.

If the garage is leased and not owner-occupied it will not qualify for SBA financing. The buyer would have to be the one occupying it for it to work SBA. The advice still applies as far as pitching it to banks to have it prequalified as a deal and see if they know any buyers. You could approach other shop owners to see if they want to expand, CPA's to see if they have clients in that industry as well.

A good majority of car wash businesses are financed by SBA loans. Every market is different for land so that will be your issue to figure out. A tunnel car wash is not going to be cheap and agree it will be $2-3MM as well. You need to talk to the car wash brokers or appraisers & other related people in your area. Also need to bring industry experience to the table or the loan will be hard to get.

The SBA only checks the occupancy when you buy the building. The bank's staff will stay in touch with you through out the life of the loan but at the end of the day if your occupancy changes for various reasons nothing will happen to the loan as long as the payments are made. The 504 loan is a pretty solid product for what you are doing. Like Christopher said there are other conventional options but they would require more down payment and many also have balloon notes. Message me if you have any further questions about SBA loans.

A deal like this would work sba if your buyer is an active business and will occupy the the building. They could buy with 10-15% down as well. You could do a seller note and be the bank but then you will want to do some good due diligence on the buyer if you are going to be there lender. Many seller notes tend to get refinanced by SBA loans when it is owner occupied CRE.

@John Hill let's definitely meet. Thank you for your service BTW. I would like to learn about your rentals and I can share anything about SBA you want to know. 

Owner occupied in commercial real estate means the business owner occupies the real estate they own vs an investor owning the property and leasing it out to other businesses. Multifamily is not eligible for SBA financing for this reason and the fact that it is really residential property.

@David Avetisyan it will be very difficult to purchase a building with a failing business in it if you are trying to rely at all on the business that is failing and in foreclosure. You would have to have an active business to occupy the building that would be purchasing it to make the loan work. The key to SBA is the building has to be owner occupied by 51%. Trying to lend to a situation where the business going concern is being foreclosed on will most likely not happen as that is a turnaround situation which many lenders will not lend into. Just like analyzing any deal a bank will want to make sure the cashflow is there to do the loan. 504 loans are made for buying owner-occupied real estate but not really for buying going concerns. A 7a loan would be a better fit for that type of situation.

I came upon the Bigger Pockets podcast a month or so ago and now have decided to jump into the community to learn more and get serious about real estate investing. I have always thought about getting into investing and already have various industry contacts in the RE world from friends and from my day job. I work as a SBA Business Development Officer helping business owners finance owner occupied CRE and other business lending requests. I would like to help anyone in the business world that has questions about SBA lending.

I have been an analyst, underwriter, operations manager, and loan officer in my industry so i'm very comfortable with numbers of my industry. I need to learn the numbers of real estate investing in the various forms to size deals up and start networking in the right areas to find them. I'm not sure of my goals yet but I think I would like to own and hold some rental properties but need to learn more about the other strategies before I know for sure. I welcome all the help I can get and plan to put in my time to help others.

Scott Snow