Small Business Loan for Real Estate Investment: We Know SBA Loans

June 7, 2024

Purchasing commercial real estate with the intention of occupying the majority of the property and using the remainder for investment purposes is a strategic financial decision that can reap significant long-term benefits for your business.

When your business is ready to purchase commercial property, you’ll need a reliable source of funding to make it a reality, and Small Business Administration (SBA) loans through Texas Gulf Bank may help.

Discover how you can achieve growth by applying for a small business loan for real estate investment purposes, including SBA loans. Learn the basics of SBA loans, the different SBA loan programs available, and how our experienced SBA loan specialist strives to provide you with a streamlined loan application process.

SBA Loans: Designed To Support Businesses

Business owners have available a myriad of financing options to help them meet their business needs. With so many loan services and loan programs to choose from, it may be difficult to determine the right one to fit your needs.

A popular option for many established small businesses is an SBA loan, which is intended to fuel business growth. The SBA is a federal agency dedicated to supporting economic development by guaranteeing a portion of the loan, allowing banks such as Texas Gulf Bank to offer bank loans to a wider range of small businesses.

What sets SBA loans apart from other commercial real estate loans is the flexibility in how your business can use loan funds to support business needs. And, when you partner with us, you gain access to an experienced team that understands both the needs of business owners and how SBA loans work, providing you with expert guidance throughout the application process.

Which SBA Loan Is Right for You?

The SBA offers two primary types of business loan programs: the SBA 504 loan and the SBA 7(a) loan. Although these two SBA loan options share some similarities, they each have distinct differences in how funds may be used, eligibility requirements, and their overall loan structures.

SBA 504 Loans

An SBA 504 loan may be the ideal loan program for businesses that want to use their funds to purchase a major fixed asset like commercial real estate. This type of SBA real estate loan may provide your business the financial flexibility you need to support the following:

Purchasing land
Constructing new facilities
Renovating or upgrading existing buildings
Making land improvements

Although SBA 504 proceeds allow your business to use funds for a variety of purposes, they cannot be used for inventory purchases or working capital. In addition, SBA 504 loans for real estate projects must be used to purchase real estate on an owner-occupied basis.

If you are looking to generate revenue for investment purposes, you will need to occupy at least 51% of the property to ensure you meet the owner-occupied standard. Then, you can rent out the remaining 49% to create a reliable revenue stream.

SBA 7(a) Loan

The SBA also offers the SBA 7(a) loan, which is a popular type of SBA loan with a wide variety of loan uses, including real estate purchases and property improvements. SBA 7(a) loans can be used for business needs including:

Working capital or inventory
Land purchase
New building construction
Street, utility, and parking improvements
Existing building renovation and expansion
Equipment purchases
Debt refinancing

The versatility of SBA 7(a) loans makes them a popular choice for business owners who have various business needs but want to avoid carrying multiple outstanding loans. Making a commercial real estate purchase with SBA loans gives your business the ability to build equity, potentially create future revenue streams by leasing unused space, and may reduce operating costs.

Understanding the SBA Loan Process

Whether your business needs a larger property for future growth, a better location with higher customer visibility, or a chance to own property and build equity through an investment strategy, Texas Gulf Bank has the expertise and strategic SBA loan programs you need to succeed.

To begin the SBA loan process, we first assess your business to determine if it is eligible to apply for SBA financing. All businesses pursuing SBA loans must first meet several SBA requirements to qualify.

Business Type

Although most businesses and industries are eligible to apply for SBA funding, there are certain requirements. Companies must be for-profit businesses, owner-operated entities, and operating in the U.S.

Industries not eligible to apply for SBA loans include investment groups, lenders, gambling-related businesses, and speculative industries.

Business Size

Any business applying for SBA loans must meet the definition of “small business” – as determined by the federal government. Specific size requirements vary by industry, with eligibility guidelines available on the official SBA website.

Financial and Business Records

All SBA loan applicants must provide business and financial information to verify that they meet minimum loan eligibility standards. This information must include personal and business credit records, credit scores, net income, equity in the business, current cash flow, future revenue projections, and the criminal history and education/work experience of loan applicants.

If your business is eligible to apply for an SBA loan to meet your business goals, Texas Gulf Bank can help you through each step of the documentation process to ensure a streamlined submission of loan paperwork.

Texas Gulf Bank Is the Experienced SBA Lender You Need

At Texas Gulf Bank, we strive to support small businesses throughout the Southeast Gulf Coast region. We are proud to be a leading provider of effective, reliable financing solutions for over 110 years.

To help businesses successfully navigate the SBA process, we have a dedicated SBA Loan Specialist available to help with each step. In addition, Texas Gulf Bank is a community-based bank with a unique regional perspective on how SBA loans can help your business flourish.

When you partner with Texas Gulf Bank for SBA financing, you gain:

Access to our experienced SBA Loan Specialist
Dedicated and professional customer service
Strategic financing solutions
Typically prompt decisions with the loan review process

When looking to execute your commercial real estate strategy, you need a dependable lending partner who will ensure you have a strategic financing plan in place if approved for an SBA loan. Texas Gulf Bank is the bank you need for what is usually a seamless process.

Get Started on a Small Business Loan for Real Estate Investment

When you’re ready to pursue a small business loan for real estate investment purposes, Texas Gulf Bank is ready to help with SBA loan solutions.

To get started, contact a lender at Texas Gulf Bank today at 1-800-467-7216, email sbaloans@texasgulfbank.com, or visit one of our many local banking centers.

We look forward to helping you achieve your business goals!

All loans subject to credit approval.