The Small Business Owner’s Guide to Commercial Real Estate
Financing Investing in real estate is a big move for your small business, but it’s an important one. It represents a move to acquiring assets and investing in your company’s long-term future. For most businesses, the first property investment will be one that allows the company to move into facilities it owns. After that, continued investments in subsidiary companies (and their facilities), income properties, and other commercial real estate purchases can help diversify your company’s income streams without splitting your business focus. For example, many retail companies find investing in multi-storefront properties a great way to increase income while drawing additional customers to a location, and they’ll need commercial real estate financing to make it happen.
If you’re just getting started, though, your first property will likely be just your own facilities. If it’s possible to move into real estate that you can partially rent to another company, that can greatly aid your monthly cash flow, reducing the impact of your overhead on your business. If not, you will want to make sure you’re buying facilities that you can make the best use of, so you can realize a return on your investment quickly. Commercial real estate financing options are there to allow you the opportunity to fund the purchase when you are ready. Depending on what you purchase, there are several ways to finance it.
Many small businesses find the SBA’s loan program ideal for purchasing their first facilities. This program is designed to provide preferential loan terms to small companies buying their own facilities, so it does require that the majority of the floor space be used by your business. You can still find opportunities to include some income property space on the lot, but your business needs to use more than half of the space for existing structures, or else sixty-one percent for new construction.
If you’re sure you want to buy a multi-storefront property or an industrial park with many opportunities for leasing to other businesses, then you’ll need to consider other forms of commercial real estate financing like CMBS loans, mezzanine financing, or traditional loans. Finding your best options for financing gets easier when you work with a lender who can provide you with access to all these different lending structures. As you consider your options, look for experts in commercial real estate you can trust to provide you with all the resources you need. That way, as your company purchases more property, you’ll have a working relationship with someone who can flex to meet your needs.
