How To Apply For SBA Commercial Real Estate Loans – In 6 Simple Steps: What does it take to obtain an SBA commercial real estate loan? If you’re new to the process, figuring out where to begin may seem daunting. But commercial real estate loans from the Small Business Administration have been around since the 1930s, and they continue to be popular among entrepreneurs today.
If you’re planning on applying for an SBA commercial real estate loan in order to finance your business venture, here are six simple steps to get you through the application process as smoothly as possible:
1. Find a lender
The Small Business Administration (SBA) offers many different types of loans, including those for real estate. Whether you are a new small business with no credit or an established business looking to expand, there is a need to find an SBA-preferred lender that can help you get the commercial real estate loan you need faster.
Below is a list of some SBA-preferred lenders you choose from.
– AIG/Countrywide Home Loans, Inc.
– American Express Credit Corporation
– Bank of America, National Association
– Chase Manhattan Bank
– Citibank N.A.
– Deutsche Bank Trust Company Americas
– GMAC Mortgage LLC
– Goldman Sachs Lending Partners, LLC
– HSBC North America Holdings Inc.
– JPMorgan Chase & Co., in its capacity as a lender affiliated with JP Morgan Securities Inc.
– KeyBank National Association
– Morgan Stanley Senior Funding Corp.
The type of property does not matter when applying for a loan from the SBA.
These loans can be used for anything from commercial buildings to apartments to hotels and even vineyards or farms. Interest rates vary by lender but it’s often around 7%. The repayment period can be up to 25 years or more depending on how much you borrow. Minimum down payment: None!
2. Prepare your business plan
When applying for an SBA commercial real estate loan, there’s a need to prepare a comprehensive financial business plan that shows the overall details of how you will use the loan after it’s approved.
3. Secure your collateral
Before you start filling out paperwork, it’s important to secure your collateral. Securing collateral will help protect the lender in case of default. The collateral is the item that will be used to pay back the loan in case of default.
Generally, that means a business owner will pledge their business as collateral for an SBA commercial real estate loan.
A bank might require other types of assets as collateral, such as:
-A personal guarantee from a high-net-worth individual
-Stocks and bonds
-A home equity line of credit or a second mortgage
-Shares of publicly traded stock or mutual fund shares
-Retirement account funds, including 401(k)s and IRAs
-Life insurance policies with cash value -An investment property
-Receivables and inventory
4. Give the lender your personal financial statements
1. Complete the application and submit it to a lender: The first step is to fill out an application, which can be found on the website of your local Small Business Administration office or through its online portal. Once you have completed the form, submit it to a lender in order to process the loan request.
2. Sign all forms required by the lender: Some lenders require a notarized signature for certain documents, so make sure you ask for this if needed.
3. Provide any additional documentation required by the lender as well as copies of tax returns: Make sure that any documents that are required by the lender are submitted with your original signed application.
4. Request an account statement from every financial institution where you maintain funds: When applying for loans from the SBA, borrowers must provide their latest statement from every bank or other financial institution where they maintain funds.
5. Submit verification of any collateral securing the loan: Collateral may include stocks, bonds, savings accounts, and certificates of deposit (CDs). The borrower needs to provide verification that these assets exist and can be liquidated quickly in case the borrower defaults on payments.
6. Attach additional documentation such as a copy of rental agreements: If rental agreements are part of your collateral package (the borrower provides them as part of verifying their equity), attach those as well when submitting your paperwork to a lender.
5. Determine if you meet the eligibility requirements
1. Determine whether you are eligible for a loan. Your business must be in operation for at least two years and have an annual net income of $150,000 or less. If your business is a non-profit, it must be tax-exempt and open to the public for at least six months of the year.
2. Make sure you can meet the monthly payments on any existing debt obligations that might impact your ability to repay the new loan (such as mortgages, car loans, and credit cards).
3. Choose the type of project you would like to finance: purchase, renovation, or construction.
4. Consider what financing options are available: traditional bank loans, other private lenders such as family members and friends; get cash now by selling equity in your property with a home equity line of credit; commercial real estate investment trusts (REITs); community development financial institutions (CDFIs);
5. Obtain pre-approval from one or more sources so that you will be ready when an opportunity comes up; 6. Get professional help if necessary: talk to potential lenders, accountants, and attorneys who specialize in small businesses
6. Complete the loan application and get it notarized
Complete the loan application and get it notarized. The first step to applying for a small business administration (SBA) commercial real estate loan is filling out a loan application form.
You can find this form online, but you’ll need to have your local bank or credit union sign the document as well. Once you’ve completed the form, you’ll need to have it notarized by a notary public. Some banks will provide this service at no charge, while others will charge a fee.
If you don’t know where to find one, try calling your state’s secretary of state office and they should be able to help locate one in your area. If that doesn’t work, ask around locally or call up any place of worship in the area—most notaries are willing to go on-site with all their necessary materials so people who don’t have transportation options can meet them there.
You might also want to contact the town clerk’s office in the city where you live if it’s available during their hours of operation; most cities’ clerks maintain lists of local notaries for people who live outside their jurisdiction and may be looking for services nearby.
7. Submit the Completed SBA Commercial Real Estate Loan Application
The last step is to go to the official website of the U.S. Small Business Administration (SBA) or the SBA’s preferred lender.
Once you’re on the site, scroll down and click on Loan Programs. Next, find Commercial Real Estate in the list of loan programs and click it.
You will then be directed to a page that lists different types of commercial real estate loans that may fit your needs.
Click on Basic Info for SBA 7(a) loans, which will take you to another page with detailed information about these loans.
Clicking Get Started now will take you to a new screen where you can create an account and fill out an application form.
Next, fill out the application form with as much information as possible, including whether or not you are an existing or new applicant for SBA financing.
Enter all required information into each field. Remember that you should include copies of any supporting documents such as tax returns, financial statements, leases, and insurance policies before clicking Submit Application Now at the bottom right corner of the screen.
Once submitted, it will take four weeks for your application to be processed by an SBA officer who reviews applications based on qualifications such as creditworthiness and character. If they approve your application they’ll let you know so that you can get started!
