Owner-occupied real estate
Own the building your business runs from, on terms that work.
Turning rent into equity can steady your costs, and it can also tie up cash the business needs. Tell us about the property and the business, and we'll show you what ownership would really cost and which financing fits.
Tell us your plan Compare 7(a) vs. 504
- We don't pull your credit to start
- Not a lender, not the SBA
- You decide what happens next
Three ways to finance it
- SBA 504. A bank loan plus a Certified Development Company loan, with a long fixed rate on the larger slice. Often the lowest cash requirement when the building is the main event. 504 explained.
- SBA 7(a). One lender, more flexible, and able to combine the building with a business purchase or working capital. 7(a) explained.
- Conventional mortgage. Fewest moving parts if you have the cash, usually with more down and a shorter term.
The side-by-side comparison, with the program figures, lives in one place: SBA 7(a) vs. 504.
The math a lender will run
Rent goes away, ownership costs arrive
Many lenders treat the rent you pay today as cash flow that disappears when you own, and replace it with the loan payment, property tax, insurance and repairs. A bigger payment than your rent can still pencil out; the question is whether the business carries the full cost comfortably.
The property is collateral
Expect an independent appraisal and an environmental review. Older, mixed-use or multi-tenant buildings get a closer look at condition, occupancy and permitted use.
The occupancy test is typically at least 51% of an existing building, or 60% of new construction. See buying your building for a worked example.
Questions worth answering before you make an offer
- How long do I realistically need this space?
- What does it cost to own and maintain, beyond the loan payment?
- Can I put this much cash into real estate and keep a cushion in the business?
- Is there space I could lease out, and do I want to be a landlord?
- What does my current lease allow if I wait?
Buying a business and its building together? They can be financed together or separately, and the structure changes your cash needed and your flexibility. Start with the acquisition page or tell us the whole picture.
Common questions
What counts as owner-occupied?
Your business has to actually use the building: shop, office, clinic, warehouse, restaurant. The program tests how much of the building you occupy, and the remainder can often be leased to others. Buying mainly to collect rent is investment real estate, which SBA programs are generally not designed for.
Is 7(a) or 504 better for buying a building?
Neither is automatically better. 504 can offer a long fixed rate on the larger slice and a lower cash requirement. 7(a) is one lender and more flexible, and it can combine the building with a business purchase or working capital. A conventional mortgage can be simpler. We price them side by side.
How much do I need for a down payment?
It depends on the program, the property type and your business. Some structures need less cash than a conventional commercial mortgage. Closing costs and fees are on top. A lender can tell you the figure for your project.
Can I rent out part of the building?
Often yes, as long as your business occupies the required share. A lender will look at the leases and may be cautious about vacancy.
Should I rent or buy?
It is a business decision before it is a financing one: cash, mobility, how long you need the space and what else the cash could do. We will help you see the real cost of owning, not only the payment.
Go deeper
Tell us what you are trying to do
Describe it in a few sentences. No documents needed to start, we do not pull your credit, and there is no obligation.
General information, not legal, tax or financial advice. Precise SBA is not a lender and is not affiliated with the U.S. Small Business Administration. All financing is subject to lender underwriting and SBA program rules. Examples use hypothetical numbers. We never charge you. If a loan closes, the lender may pay us a referral fee, disclosed on SBA Form 159 (how we get paid).