Pro/Cons of Real Estate in SBA Transactions

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by a searcher from Columbia University - Columbia Business School
in Washington, DC, USA

2yrs ago

Pro/Cons of Real Estate in SBA Transactions

Hi all,

I'm looking at a potential deal right now which includes the option to purchase the commercial real estate where the business currently operates.

What are the potential benefits of adding real estate into an SBA transaction? Any good reasons to lease instead?

Thanks a lot!

1 Like

346 Views

reply by a lender 2yrs ago
from Eastern Illinois University in 900 E Diehl Rd, Naperville, IL 60563, USA

I would concur with Francis. The biggest benefit of including the property into the acquisition is the ability to secure a longer amortization on the SBA 7A loan. However, you need to judge whether the property is the right fit for the business going forward. If it is not a good long-term fit or you cannot secure a fair price for the real estate, it might not be worth the capital investment. We are more than happy to discuss your particular situation and look at ways the real estate could impact your purchase from a financial standpoint if you like. You can ping me here or directly at redacted Good luck with your decision.

reply by an intermediary 2yrs ago
from California State University, Northridge in Los Angeles, CA, USA

Get a broker's opinion of value on the real estate, should not cost you anything. If you can sell the real estate for more than you can acquire it for (with you leasing it back as the tenant), it's something to consider to help with acquisition financing or simply adding more cash to the balance sheet. The argument "for leasing" is that the rent payments are an expense on your P&L lowering your taxable income