How to Leverage SBA Loans for Commercial Property Purchases
- Nate Jones, CPCU, ARM, CLCS, AU
- Nov 9
- 2 min read
Buying commercial property can be a game-changer for your business, but the upfront costs often feel overwhelming. That’s where Small Business Administration (SBA) loans come in. These government-backed loans make it easier for small businesses to purchase real estate with lower down payments and favorable terms.
In this guide, we’ll explain how SBA loans work for commercial property purchases, outline the benefits, and show why partnering with Wexford Insurance for commercial property coverage is essential once you close the deal.
What Is an SBA Loan?
An SBA loan is a financing option backed by the U.S. Small Business Administration, designed to help small businesses access affordable capital. While the SBA doesn’t lend directly, it guarantees a portion of the loan provided by approved lenders, reducing risk for banks and making it easier for businesses to qualify.
Types of SBA Loans for Real Estate
1. SBA 504 Loan
Purpose: Buying commercial real estate or large equipment.
Structure: Typically 50% bank loan, 40% SBA-backed loan, 10% borrower down payment.
Benefits: Fixed interest rates, long repayment terms (up to 25 years).
Purpose: Versatile—can be used for real estate, working capital, or equipment.
Structure: Up to $5 million, with flexible terms.
Benefits: Lower down payment, competitive rates, and broad usage.
Benefits of Using SBA Loans for Property Purchases
Lower Down Payments – As little as 10% compared to 20–30% for conventional loans.
Longer Terms – Up to 25 years for real estate, reducing monthly payments.
Competitive Interest Rates – Thanks to SBA guarantees.
Preserve Cash Flow – Keep more working capital for operations and growth.
Steps to Leverage SBA Loans
Determine Eligibility – Must be a for-profit business operating in the U.S. with a tangible net worth under $15 million.
Choose the Right Loan Program – 504 for property-focused purchases, 7(a) for flexibility.
Prepare Financials – Tax returns, balance sheets, and projections.
Work with an SBA-Approved Lender – They’ll guide you through the application process.
Close the Deal – Once approved, you can purchase your property and start building equity.
Don’t Forget Insurance
Once you own the property, protecting it is critical. Commercial real estate comes with risks—fire, storms, liability claims, and business interruption can all impact your investment.
Wexford Insurance specializes in:
Commercial Property Insurance – Covers your building and contents.
General Liability – Protects against third-party claims.
Loss of Income Coverage – Keeps your business running during repairs.
Customized Solutions – Tailored for office, retail, industrial, and mixed-use properties.
SBA loans are one of the most powerful tools for small businesses looking to purchase commercial property. With lower down payments and favorable terms, they make ownership achievable. But financing is only half the equation—protecting your property is just as important. Contact Wexford Insurance today to ensure your investment is covered from day one.
