For many, the best way out of the problems caused by the COVID-19 Recession is to create their own job by embracing their entrepreneurial spirit. We were stunned to find out just how affordable user/owner real estate is right now. The SBA (Small Business Administration) 504 Loan option allows businesses to put only 10% down..preserving precious capital for labor, wares, utilities, etc.
Conventional Loan Advantage:
Buying a $1,200,000 building with conventional financing would require a 20% downpayment ($240,000) with the balance being financed with 4.5% interest on the balance, amortized over 25 years. Monthly payments for principal and interest would be $5,336/month. Advantage: Fantastic affordability due to low-interest rates.
SBA 504 Loan Advantage:
Doing the same deal with a 504 SBA Loan would require a 10% downpayment ($120,000) with 50% of the purchase price being financed by a conventional lender at 4.5% interest, and 40% of the total being an SBA Loan at 2.6% interest. The combined principal and interest would be $5,513/month. Advantage: for only an additional $177/month…this option would cut the downpayment in half. That $120,000 downpayment reduction will be welcome as our business grows and we need our cash reserves.
A Picture is Worth…
To demonstrate the above example, I’ve included a graphic provided by Eric Bergeson, Vice President of Key Bank. He is a Senior SBA Specialist, and a great resource for financing owner/user real estate…and more. He’s available at (503)353-2126.
If you want to be a genius in 5 years, make wise commercial real estate investments now. If you want a valued resource to help you reach your goals…contact Rose City Commercial Real Estate: (503)577-1034, or rick@rosecitycre.com.
Notes:
- Rose City Commercial Real Estate recommends resources based solely on: A.) Their reputation amongst industry pros, and/or B.) Our personal experiences. etc.
- There is no common ownership between Rose City Commercial Real Estate and recommended resources.
- We do not request, nor do we accept referral fees from recommended lenders, inspectors, management companies, and other related resources. That way you know there is no conflict of interest.
