On the latest “The Commercial Real Estate Hour” on KHTS, Host Jesus Henao of Leola Commercial, Inc. invited a special guest to talk about Small Business Administration, or SBA, financing.

Kelvin Davis of Seacoast Commerce Bank noted that many small business owners aren’t aware of the financing options available through the SBA, which he called “a viable alternative to what we would describe as conventional financing.”

For those who don’t know about SBA financing, business owners may be discouraged when their regular bank tells them they need to put down 30-50 percent of the loan, according to Davis.

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“For many business owners, that’s just too much capital to invest in a piece of real estate, so many unfortunately don’t take advantage of the SBA because they don’t know about it,” he said.

The SBA is a government program designed to help small business owners get information about financing and education about business growth and development, working with private banks to provide financing options, according to Davis.

“Financing is available for commercial real estate, business acquisition, equipment, working capital — a lot of different avenues that business owners can pursue to get money that they need for their businesses,” said Davis.

SBA financing differs from “conventional financing” because the federal government offsets some of the risk that the banks would normally incur in an effort to incentivize the bank to grant the loan, and therefore give more small business owners the opportunity to invest in their business, according to Davis.

“On commercial real estate deals, generally up to 75 percent of the outstanding loan is guaranteed by the federal government, which means that in the event of a loss, the lender can go back to the government, to the Small Business Administration, and request reimbursement for any loss that is sustained, up to 75 percent,” he explained.

To qualify for SBA financing, Davis noted that the money must be used for a business only, meaning that loans cannot be used for personal use or investment property.

“So if you’re looking to buy an apartment building or buy something that’s rented out to other people, that would not be an eligible use,” Davis said. “But if the building is going to be occupied by your business, by the applicant’s business, then it would be eligible. And the good thing is that for commercial real estate, the applicant’s business only needs to occupy a minimum of 51 percent of the building, so the applicant can lease out up to 49 percent of the property.”

Henao concluded, “For the small guy out there, there is a vehicle for you to have success, and that’s great. Most people don’t know that.”

Leola Commercial, Inc.

26575 Ruether Ave 2nd Floor

Santa Clarita, CA 91350

(818) 570-3301

Leola Commercial, Inc. is a boutique Santa Clarita commercial real estate firm that specializes in the sale of multi-family apartments, land for development, retail real estate, senior housing, tax credit properties, industrial, NNN and office. Headed by Jesus Henao, the Santa Clarita real estate firm prides itself on maintaining “old world” customer service principles and personalized representation. Henao is also the host of “The Commercial Real Estate Hour” on KHTS Mondays at noon.

Leola Commercial, Inc. – Santa Clarita

https://www.youtube.com/watch?v=oYtQMqFWTY8

Leola Commercial Inc., Commercial Real Estate, Multi-Family Apartments, Santa Clarita Commercial Real Estate, Land for Development, NNN, Retail Real Estate, Santa Clarita Real Estate