At some stage of your company’s development you may consider purchasing your own business location. It’s an exciting prospect to be your own landlord and build real estate equity as your business grows. But what happens when you can’t find the perfect property to meet your needs? Constructing a business property from the ground up, or renovating the current space you are leasing, may be the only options available to you. Locating the right financing to meet your construction or renovation needs can be a cumbersome task if you don’t know where to look.
Locating a piece of land and constructing a business property is not uncommon in a lot of industries. Hotel and self-storage facility owners often build their business property from the ground up, since finding an existing building that meets the required location and amenity needs is not always possible. Gas-stations, restaurants, and franchises are other business types that often grow revenue through expansion and construction of additional locations. Small business owners with warehousing and manufacturing needs also find it advantageous and more cost effective to construct their own facilities.
Renovation or Leasehold Improvements
Business owners that own their business location already, or rent a physical location, may at some point have a need to renovate their property. Renovating may also be required when you’ve purchased a property that needs updating, refreshing or customization for your business. If you’ve leased a property for your business that is in shell condition, or the space was previously built-out for a different business, then improving your location with “leasehold improvements” for your specific business use will be required.
One of the most affordable ways to construct your business property is through SBA financing. SBA financing offers below market interest rates and a low capital injection requirement. It is often possible to get SBA construction financing for up to 90% of your project and land acquisition costs, which means your cash contribution could be as little as 10%. Our recommended SBA lender Fountainhead, provides ground-up construction financing from $250,000 to $20+ million for a variety of businesses and commercial property types. Fountainhead offers low rate permanent construction loans in the 5% to 7%+ range that are fixed for up to 25 years. Fountainhead’s team has funded over $23 billion of SBA loans, so you will be working with an experienced lender for your business property construction project.
SBA financing is also a great financing vehicle for funding renovations or improvements to your commercial real estate property. If you rent your business location, SBA financing can be used for leasehold improvements as well. Fountainhead also funds SBA renovation loans from $250,000 to $5+ million, and can offer low interest rate loans with terms out to 10 years and no prepayment penalty. Our recommended business working capital lender SmartBiz, uses proprietary technology to quickly provide SBA renovation loans from $30,000 to $350,000 in under 30 days. SmartBiz also provides bank term loans from $30,000 to $200,000, funds can be obtained in as little as 2 business days and proceeds can be used for business property renovations.
Constructing a business property or renovating one you already own or lease can seem daunting, but partnering with a seasoned lender can make the experience manageable. SBA loans are a great option to finance the construction of business property since they offer high-leverage and low long-term rates. A company like SmartBiz that has provided over $1 billion in funding to small businesses, can quickly provide affordable financing for renovations or leasehold improvements to your business property.