The Perfect Storm

NOW IS THE TIME TO FINANCE COMMERCIAL REAL ESTATE! June 8th, 2010. The SBA lowered their interest rate to 5.29% and will accept as low as 10% down on commercial real estate.

This is the lowest it has ever been and probably the lowest it will ever be! If you are on the fence about purchasing business assets, commercial real estate OR purchasing businesses that include commercial real estate, PLEASE, consider the SBA. Call me and I will introduce you to a lender. This is truly unbelievable.

Banks and other lending institutions offer a number of SBA guaranteed loan programs to assist small business owners. While the SBA itself does not make loans, it does guarantee loans made to small businesses by private and other institutions.

The SBA (Small Business Administration) offers guarantees on loans for small businesses or entrepreneurs who have cash flow but do not have the necessary principal to obtain a loan for expansion or for a startup. The SBA has many different types of guarantees that they will give to private lenders, each has its own interest rate.

7(a) Loan Program:
This is SBA’s primary and most flexible loan program, with financing guaranteed for a variety of general business purposes. It is designed for start-up and existing small businesses, and is delivered through commercial lending institutions.
CDC/504 Loan Program:
This program provides long-term, fixed-rate financing to acquire assets (such as real estate or equipment) for expansion or upgrade to your business. It is designed for small businesses needing financing against their assets. and is delivered by CDCs (Certified Development Companies) which are private, non-profit corporations set up to contribute to the economic development of their communities.

Business owners in search of small business loans have a government agency working on their behalf  and that is the SBA. They encourages local banks to lend money to local businesses.
If you apply for a small business loan at a bank, the bank will check your application and supporting documentation to see if you qualify for a small business loan. If you do not qualify for a regular small business loan, the bank can check your application against the SBA guidelines. If your application meets the guidelines set by the SBA, the bank can offer you a loan that is guaranteed by the SBA. This means that in the event the business owner defaults on the small business loan, the SBA will pay the bank some money to help offset some of the loss it could experience.

One thing to know, the SBA will require you to commit to unlimited personal liability for the loan, but if it helps you grow and or succeed, then it may be worth giving that promise to the SBA.

It is truly the perfect storm in Commercial Real estate. Prices are coming down, and there are cash stressed owners willing to offer a deal to get some cash. Combine that with this news and you have all the notice you need that it's time to get serious about a business purchase or commercial real estate.

Let me crunch some numbers for you. I can run a discounted cash flow analysis, with financing , against your investment to show you if it will cash flow with the reported earnings and SBA loan. Everything is coming together for you, and the wind is starting to blow. Don't wait this storm out.