You can reduce monthly costs, build equity in commercial real estate and benefit from depreciation write-offs. Quick underwriting approval in as little as 5 days!
We can help you obtain 100% financing if you would like to Purchase the Building you are Leasing.
Key Commercial Capital, through our SBA lender partners has a new loan program for businesses who are currently leasing their commercial space and would like to buy it. In the same way it makes good financial sense for many homeowners to own their home, rather than rent, business owners should consider the same. Why not build equity and create a better resale value for your business by purchasing the space your business is currently leasing? We can help you obtain a 20 to 25 year, fully amortizing loan term (no balloon payment) with NO equity injection requirement. You will not be required to come up with a down-payment, so you will not need any excess liquid capital to use on the project. The Commercial Real Estate purchase can be up to a value of 5,000,000. Maximum LTV of 110%.
Leasing Commercial Space for Your Business vs Owning
Your business is spending capital paying for its lease each month. Why not consider a Rent Swap? If you purchase the space, you may be able to reduce the monthly expenditure and at the same time, build equity. Preserve your capital to use toward other business expenses. When a loan amortizes over a 25 year term, the monthly loan payment can end up being much lower than your monthly lease payment. Additionally, we can work out a plan to finance additional working capital for repairs, renovations or newly updated equipment. Working Capital SBA Loans are often limited to a 10 year term. In this case we can blend together the working capital portion of the loan together with the loan for the building and stretch the entire total over a 20 or 25 year term.
Your business must have been active for 2 years or more with corporate tax returns showing growth and at least a small profit. We would like to see roughly a 1.2x Business DSCR. This should not be tough for newer businesses who are still in a growth phase. Your business must occupy at least 51% of the building space. If there are other businesses leasing in the same building, you just need to be sure that your space is larger than their space. Another idea, would be to create a small separate space with the working capital you can obtain and rent it out to another business. You can collect rent and use it toward your loan payment for the blended commercial building/working capital loan.
If you are not able to purchase the current building you are leasing, you can still take advantage of this program. We can consider commercial spaces that are similar or somewhat comparable to the one you are renting. It may be worth your while to break a current lease early to take advantage of this program. We would be happy to talk through the options with you.
The minimum credit score required for this loan program is very reasonable at 675 to 700. There is a pre-payment penalty, but it is one that is not overbearing for a 20 to 25 year term loan. If you pay the loan off in the first year, there would be a 5% pre-payment penalty. If you pay the loan off in the second year there would be a 3% pre-payment penalty. If you pay the loan off in year 3, 4 or 5, there is only a 1% pre-payment penalty. After 5 full years, you are free to pay the loan off in full with no pre-payment penalty. The rates are the same SBA rates as regular 7(a) loans: Prime + 2.75%. The loan will not appear on your personal credit report, which keeps your credit separate from the businesses credit.
Underwriting Approval Time and Required Documents
The Underwriting period for this loan program is very quick. We have been able to get files approved in 5 days from when the file enters formal underwriting. We cannot promise a 5 day loan approval on every application, but we will most certainly try our best to expedite the process. We will need a full two years of financial reports. This includes, but may not be limited to Corporate Tax returns, Profit and Loss Statements, Balance Sheets and future financial projections. We may also require copies of business bank statements.
Taking the Next Step to Commercial Property Ownership
We encourage you to identify a property that would work for your business if the one you are currently renting is not sufficient. Execute a letter of interest with your current landlord or the seller of a comparable commercial property and give us a copy of the LOI. We can underwrite your loan, including any extra working capital, swiftly and get your business on its way to owning Commercial Real Estate. Imagine owning your commercial space and not having to come up with a down-payment. This is a great opportunity to take advantage of a program that can escalate your business to the next level. Please feel free to reach out with questions. The best way to begin a discussion with Key Commercial Capital is to complete the online pre-qualification questions. This exercise is not a formal application. It is simply a way for us to gather background information about your file, so we can be adequately prepared with the right information to share with you when we schedule a call.