Using the SBA 7(a) for an Office Building
Whether you’re building a new office building or buying an existing one, a business mortgage is an expensive ordeal. New office building construction can be more than $150 per square foot, depending on where you’re located.
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Whether you’re building a new office building or buying an existing one, a business mortgage is an expensive ordeal. New office building construction can be more than $150 per square foot, depending on where you’re located. Elevators, fire escapes, heating and cooling systems, security systems, kitchen appliances, and so much more can drive the cost of new construction up.
SBA7a.Loans can help you get the funding you need for:
New construction of an office building. Any of the costs associated with new construction can be covered by the SBA 7(a): elevators, escalators, dumbwaiters, sprinkler system, alarms and security, and more.
Refinancing an office building. For more information, check out our page on Refinancing Debt.
Expanding to a new location. Buying an existing office building is another common use of the SBA 7(a).
Important: Glossary and FAQs about SBA Loan Programs
SBA7a.Loans isn’t limited to helping borrowers with 7(a) loans. In fact, we can help you out with a variety of SBA-backed loans, including SBA 504 loans. SBA 504 loans typically have lower interest rates and smaller down payment requirements when compared to 7(a) loans. Unlike 7(a) loans, which can be used for working capital and other business expenses, SBA 504 loans are restricted to funding commercial real estate, heavy equipment, and other fixed assets.
To learn more about SBA 7(a) loans or to get a free quote, simply click the button below!
What are the benefits of using the SBA 7(a) loan for an office building?
The SBA 7(a) loan can be used to purchase or lease office space, purchase equipment, and even meet payroll expenses. According to ReadyCap Lending, an SBA Preferred Lender, real estate loans typically require 10% down and carry terms of up to 25 years. This loan can also be used to get out from under a lease, or to move into a new facility with room for the influx. By working with a lender like ReadyCap Lending, the business owner experiencing rapid growth can quickly close a deal and get the keys to the building they need.
What are the eligibility requirements for an SBA 7(a) loan for an office building?
The SBA 7(a) loan for office-based companies can be used for anything from buying or leasing office space, to purchasing equipment, and even meeting payroll expenses.
There are some basic eligibility requirements for the SBA 7(a) loan:
- Your business must operate for profit. Nonprofits and not-for-profit businesses are not eligible.
- You must also have some equity in the business — this could mean you already have a profitable business, or you could use your own personal equity as collateral.
- If you have any alternative financial resources, you must have used them first. For example, if you have a personal savings account or are able to get a personal loan, then you must first pursue those options before applying for an SBA 7(a) loan.
- The business owner cannot be on parole.
- You must be doing business in the U.S. or its territories.
What are the maximum loan amounts for an SBA 7(a) loan for an office building?
The maximum loan amount for an SBA 7(a) loan for an office building is $5 million. This is the maximum amount that you can borrow for your small business with an SBA 7(a) loan. The SBA will be funding $3,750,000 of the loan and your private lender will cover the rest.
For more information, please see the following sources:
What are the repayment terms for an SBA 7(a) loan for an office building?
The repayment terms for an SBA 7(a) loan for an office building are up to 25 years. This is according to the SBA 7(a) Loan Terms page on the SBA7a.loans website, which states that terms for SBA 7(a) loans include:
- Loan Term:
- Commercial Real Estate: Up to 25 years
- Equipment: Up to 10 years
- Working Capital: Up to 10 years
- Loan Size: Up to $5 Million
- Interest Rate: Maximum rates are between 7.25% and 9.75%
This is also confirmed by the Using the SBA 7(a) Loan for Land or Real Estate page on the SBA7a.loans website, which states that the maturity for real estate and construction loans runs up to 25 years.
- Loan Term:
What documents are required to apply for an SBA 7(a) loan for an office building?
To apply for an SBA 7(a) loan for an office building, you will need to provide the following documents:
- SBA Form 1919 (borrower information form)
- SBA Form 912 (statement of personal history)
- SBA Form 413 (personal financial statement)
- Financial statements, including a balance sheet, profit and loss, and income projection
- Agreement to purchase the office building
- Letter of intent to purchase the office building
- Business tax returns for the past three years
- Any outstanding business debt
- Long-term business contracts
- Documentation of business assets
- Business lease agreement
- Incorporation documents and/or business license
- Business plan
- Independent business appraisal
The SBA allows applicants to get help (for example, from a lawyer or a translator) filling out the application paperwork, but your lender will be required to submit information about who gave you help to the SBA, so you’ll need to document who this person is as well.