We’re continue discussions with our in-studio guest, Isaac Grant, and today we’re going to talk about small business loans.
Featuring:
Bob Nelson, Eugene real estate investment broker
Marcia Edwards, Eugene residential real estate broker
Isaac Grant, Eugene commercial lending officer
Marcia Edwards: Let’s go back into the commercial wheelhouse. Let’s talk about commercial lending with Isaac Grant. Isaac’s joining us from Northwest Community Credit Union. He is a lending officer that has extraordinary talents and creativity. If you’re exploring what to do commercially in real estate, give Isaac a call. Thanks for joining us, Isaac.
Isaac Grant: Thank you so much.
Bob Nelson: Let’s go into, specifically, owner-occupied financing of commercial, or investment-oriented, property. If I were to occupy, let’s say, 51% of the property that I’m acquiring, most likely for my business, what type of financing would be available to me?
Isaac Grant: We have a couple of different types of financing, Bob. We can still do the conventional type of financing, where a business can put a little additional cash down if they have that amount of cash reserves available to them. We can lend up to 75, 80% of the value of that piece of real estate, but we can also look at a couple of different creative lending solutions for folks that maybe don’t want to deplete their cash reserves ’cause they want to keep the cash for the operational side of their business. Much different than the investment side, where maybe your cash reserves is just for deferred maintenance or tenancy turnover, an operational business, they need those cash funds available to actually operate the day to day functions of the business.
Bob Nelson: That could be fairly important to them. Let’s go into the SBA financing just briefly.
Isaac Grant: Yeah. One of those options to get creative is to use an SBA loan. SBA is a small business administration. For real estate especially, we’d be looking, most likely, at the SBA 504 program. A lot of folks maybe have heard of that. The kind of typical way that those loans work is that the financial institution, such as Northwest Community Credit Union, would lend 50% of the value of the property.
The Small Business Administration would then come into a second position note at probably around 35 to 40% of the value. Then, the owner, the borrower, is going to come in with 10 to 15% cash to make the deal finalize.
Bob Nelson: Okay. Is that really difficult to qualify for?
Isaac Grant: It depends on the situation, Bob. It’s maybe a slightly longer process than conventional financing, just because there’s two folks underwriting the deal, but the complexity of it isn’t too difficult.
Marcia Edwards: I find that really fascinating and exciting because a lot of people out there don’t realize that 10% down. It sounds like you could get into some commercial financing. That’s with Isaac Grant and Northwest Community Credit Union. Go see him.
Join Eugene, Oregon, real estate experts: Bob Nelson, Real Estate Investment Broker with Pacwest Real Estate Investments, and Marcia Edwards, Residential Real Estate Broker with Windermere Real Estate, daily at 5:30 on KPNW for the “Real Estate Today” radio show.
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