Own Your Office Instead of Leasing It: How SBA Financing Works for Owner-Users

Most business owners in El Paso lease their space because they assume buying is out of reach. For a lot of them, it isn't.

If you're writing a rent check every month and you plan to be in business five years from now, it's worth understanding how SBA financing works for owner-users before you sign another renewal.

You may need less down than you think

Conventional commercial financing typically wants 25-30% down. SBA owner-user programs are built differently — qualified buyers can often get in for 10-15% down.

On a $600,000 building, that's the difference between roughly $150,000 out of pocket and closer to $60,000-$90,000. That gap is what keeps most tenants renting when they didn't have to.

The 51% occupancy rule

This is the one people get tripped up on. To qualify as an owner-user, your business generally needs to occupy at least 51% of the building for an existing property.

The upside: you can lease out the rest. Plenty of owners buy a building bigger than they need, occupy the majority, and let a tenant help carry the note.

Terms are longer than most people expect

SBA owner-user loans commonly run 20-25 years on real estate, with fixed or partially fixed rate structures depending on the program. Compare that to a conventional commercial loan that may balloon in five to seven years and force you back to the table.

Build-out costs can often be financed too

This is the part that gets overlooked. Renovation and improvement costs can frequently be rolled into the loan rather than paid out of pocket. If you're a restaurant needing a hood system, a medical user needing plumbing, or a shop needing a specific layout, that matters a lot.

What you'll need to get pre-approved

Before you start touring buildings, get your file together. Lenders will generally ask for:

• Three years of business tax returns

• Three years of personal tax returns

• Year-to-date profit and loss statement and balance sheet

• Personal financial statement

• Business debt schedule

• A brief description of the business and how long you've operated

Getting pre-approved first is what separates a serious buyer from a shopper. It also tells you your real budget before you fall in love with a building you can't close on.

Is buying actually right for you?

Not always. If you're growing fast and don't know what your space needs look like in three years, leasing gives you flexibility that ownership doesn't. If your business is stable and your space requirements are predictable, ownership converts rent into equity.

The honest answer depends on your numbers, not on a rule of thumb.

Where to start

I represent buyers and tenants across El Paso — retail, industrial, office, and land. I'm not a lender, so I'm not the one who approves your financing, but I can point you to lenders who do this every day and help you figure out whether ownership makes sense for your situation before you commit to anything.

Michael Reyes, Anchor Point Commercial Group

MReyes@AnchorPointCommercial.com

Are you leasing a space you could have been buying?