SBA Loans Can Help Alpharetta Commercial Real Estate Buyers

Low interest rates and falling property values, not to mention lots of available space, make now a great time for Alpharetta businesses that want to purchase commercial real estate or build new facilities. Unfortunately, many companies have a hard time coming up with the 20-25 percent down payment that’s typically required for commercial real estate.

Well, there’s lots of good news right now for commercial real estate buyers in Alpharetta. The U.S. Small Business Administration (SBA) offers several different types of SBA loan programs designed specifically to help small businesses obtain financing to buy, build or renovate commercial real estate.

And thanks to the American Recovery and Reinvestment Act (aka the Stimulus Act) passed earlier this year, many fees associated with these SBA loans have been waived for the remainder of this year.

Karen Cross, the chief credit officer and senior lender with Community Business Bank in Forsyth County, says there are two main SBA loan programs that can help companies purchase commercial real estate: the SBA 7a program and the SBA 504 program. “These work especially well for new and startup businesses where the bank may be hesitant because the business doesn’t have a proven track record yet,” she says.

The SBA reduces the bank’s risk of lending to newer and less-established businesses by guaranteeing a portion of the loan, thus encouraging banks to lend to small businesses. The SBA typically guarantees 75-85 percent of 7a loans, but this was raised to 90 percent by the Stimulus Act for the rest of 2009. In addition, the guarantee fees of 2 to 3.5 percent of the guaranteed portion of the SBA loan are also being waived through the end of the year.

The typical structure of an SBA 504 loan is a 10 percent down payment by the borrower, 50 percent financing by the bank and 40 percent financing by the SBA. Borrowers must normally pay fees of 2 percent on 504 loans, but this fee is being waived this year for as long as the program’s funds remain available (only about 40 percent of the funds had been used as of July). This would result in a savings of $20,000 on a $1 million loan. Owners can put this money to good use, perhaps on commercial real estate property improvements, for example.

“These SBA programs are especially helpful for businesses that have the cash flow to repay loans but don’t have the normal down payment,” says Cross. “They allow them to buy commercial real estate with as little as 10 percent down.”

She adds that the interest rate on the SBA portion of 504 loans is typically between 100-150 basis points lower than the rate on the bank-financed portion. SBA loans can be amortized for up to 20 years with no calls or balloon payments. “SBA loans allow banks to take on a little more risk with new and start-up businesses than they normally would,” says Cross.

As with any loan, a bank will consider a borrower’s ability to repay the debt and whether the borrower can pledge sufficient collateral to secure the SBA loan. Borrowers will generally have to provide the bank with tax returns, financial statements, financial projections and other documentation just like they would if applying for a traditional small business or commercial real estate loan.

Finding the Best Deals in Commercial Real Estate

If you want to be successful and profitable in the commercial real estate market, it will depend heavily on your ability to find the best deals on the commercial real estate market. You can lower your burden and maximize your net income if you only invest in commercial real estate transactions that have great potential. As an investor, it is important that you find a good offer to make money, but you must remember that it takes some work on your part as an investor to find the best offer. Here are some tips that can help you find the best deals in commercial real estate so you can make a profit and get success as an investor.

Tip # 1 – Know the Area and Market – The most important thing you need to know if you want to find the best deals in commercial real estate is the area and the market. You must be very familiar with the area that you plan to invest and you also need to be informed about the market in that specific area. If you are not familiar with the area you plan to invest, then you have to make it your business to learn about market areas and trends. You cannot determine whether an investment opportunity is a big thing unless you have a good understanding of the commercial real estate market in that specific area. Take the time to find out the area and market in the area, and you will definitely get the best commercial real estate offers.

Tip # 2 – Utilizing a Pocket List – Another tip that can help you find the best deals in commercial real estate is to use the pocket list you might have access to. This listing can help you find and track extraordinary investment opportunities. Often you can get this list from brokers to help you pursue excellent real estate investment opportunities. Pocket lists are commercial real estate opportunities that have not yet entered the market. So, you basically get a jump on property before someone else does it. If you want to find many things, don’t forget to use your pocket list.

Tip # 3 – Use Online Resources – Many real estate investors today really utilize their online resources when searching for the best commercial real estate offers. Using online resources can save a lot of time; however, you still need to make sure that you take the time to do the investigation that you need to do. There are many online websites that are directed to investors in the commercial real estate market. Quite a number of investors are using online resources to find the best deals, and you can use this easy access resource to help find great deals too.

Tip # 4 – Use Business Contacts to Find Deals – If you have great business contacts in the commercial real estate market, you can use them. This business contact can help you find some great commercial real estate offers. It is important that you take the time to build good relationships with these business contacts so that you are the person they tell when they hear about a great commercial real estate deal. Fostering business contacts can take several jobs; However, it is very valuable if you can get a great business deal from him.

Tip # 5 – Get to know your Financial Capacity and Strategy – Know your financial capacities and strategies are also important if you want to find the best deals in commercial real estate. You will never want to push yourself too financially, so you need to know your financial capacity. It is also important that you have a good strategy for investing as well as for success by looking for great deals on the commercial real estate market.

Tip # 6 – Make Sure to Practice Due Diligence – It is very important that you carry out due diligence if you want to find the best commercial real estate offers. Due diligence is one of the most important steps in finding many things. Some things you need to consider when practicing due diligence are the condition of the existing property, the actual property value, how much you can generate from the property, title issues, zoning issues, and many other important aspects. Make sure that you take the time to do an adequate due diligence to ensure that you really get the most commercial real estate that you plan to invest.

Using all these tips together can help you find great commercial real estate offers. If you want to be on the road to success, great deals are important, and these tips will allow you to find the best deals in commercial real estate that

Commercial Real Estate – A Complex Purchase Done Correctly

Purchasing commercial real estate is a much more complex process more so than purchasing a home or just purchasing land. But, it doesn’t have to be so difficult. One of the best decisions that you can make is to higher a real estate agent that specializes in commercial real estate sales.

This individual should have experience in working with the type of property that you are interested in buying or selling. There is more to take into consideration, after all, than just the value of the building and the land.

A commercial real estate agentwill help you to purchase real estate for a business or for rental property by doing his homework. It is essential for him to determine if the area is worth the cost that is being asked for it.

If the value of the land and building are not going to benefit you, he or she needs to determine this through a series of reports and then present it for you. One of the key elements of his job is to find the prime location for you to put down your business that will make it as successful as possible.

If you are looking to sell your commercial property, the right commercial real estate lender will help you to get the best price for it. In addition to helping you to determine the value now and into the future, the real estate agent must also determine if the best way to market your property.

It is unlikely for a buyer to just drive by and bid on the property. Investors need to come from far and wide and for that a specific and skilled agent is required to provide the right marketing potential.

Interview the commercial real estate agents that are available today. Find out what they propose to help you with and the cost of it. Most importantly, determine if what they have to offer you is what you really want. Find out more about their experience and their success.

Finally, determine if they are the right person by developing a plan of action with them to insure that this commercial real estate transaction goes as smooth as possible.