How to Finance Your Owner-Occupied Commercial Real Estate

Real estate buyers have a variety of different types of financing available to them. It is up to you, as a broker, to keep track of the different financing options because if you are unable to find clients the best financing for their needs, you may lose income.


Every broker comes across owner-occupied properties from time to time. If you have contacts in this market, then you will be able to find and retain customers. To have these types of connections will keep you on future clients’ minds if they ever need to venture into commercial real estate. Here is what you need to know about financing commercial properties.


In order to place an owner-occupied property, you need to know about SBA loans. SBA loans are on offer from banks and non-bank lenders to small business owners. The Small Business Administration offers a portion of the loan so that the lender will extend credit to small businesses. These loans can be as large as $5,000,000.


Naturally, since this is a government program, there are rules to abide by. These rules include:


  • What can be financed
  • What interest rate can be charged
  • Who is eligible for financing


Of course, these aren’t the only rules. As a commercial mortgage broker, you need to know the rules yourself. However, in case you’re already feeling overwhelmed, you don’t necessarily need to know every detail. Here are some questions that you need to ask:


  • Does the business show profit on tax returns and will the projections cover commercial real estate mortgage payments?
  • Does your buyer have a good credit store? Have they ever filed for bankruptcy, been arrested or received a judgment?
  • Will the property be 51% or more owner-occupied?
  • Does the buyer have 10% of the down payment in cash?


The answers to these questions can help you determine if a borrower is qualified.


To find sources of SBA financing is easy enough. It takes a little extra work if you want to find a reliable source, however. The best way to find one is to visit the Small Business Administration website and to contact the SBA office. They will provide you a list with reputable, active lenders.


When you have a lender in mind, all that’s left is for you to call or e-mail him or her with your leads. Make sure that you have a few lenders in mind, in case you don’t hear back. With the right knowledge, you’ll be able to help clients with commercial real estate.


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