Expand Your Business Physically with a Small Business Loan

If you’re like most small business owners, you’re constantly thinking about ways to grow your business fiscally. As your business expands and becomes more established, you may also want to start thinking about growing your business physically.

Whether you’re leasing a storefront and are considering purchasing commercial property, or you’re already an owner and want to further expand, consider these five potential benefits as you weigh your options.

Five benefits of commercial property ownership

There can be a variety of financial advantages to owning the commercial property where your business resides:

• Fixed costs: Using a small business loan to secure a long-term mortgage can help you lock in your monthly costs and protect you from rent hikes you may be subject to as a tenant. Plus, consistent costs make financial planning easier as they allow you to forecast your business’s profitability more accurately.
• Extra income: If the property you purchase is larger than what you need for your business, you can generate additional income by renting unused space.
• Tax benefits: Talk to an accountant to find out if you would be able to deduct mortgage interest, property taxes or depreciation.
• Investment value: Because real estate tends to appreciate over time, using a small business loan to purchase commercial property can also be a good investment – if you’ll own it long enough to see its value increase. An experienced commercial real estate agent can help you find a property that offers good investment potential and makes sense for your business.
• Freedom: Being a commercial property owner also affords you the freedom to renovate your business space, which you might not be able do as a tenant. If you are thinking of purchasing commercial property or you want to make cosmetic or structural changes to your existing space, consider these loan options.

SBA Express Loan: These Small Business Administration (SBA) loans are backed by the U.S. government and designed for businesses with limited credit histories. This means newer businesses may have a better chance of qualifying for them than they would for other types of loans.  SBA Express Loans are a good idea if you’re considering a renovation as they can pay for materials, equipment and labor to expand. They can also be used for land purchases, but keep in mind they have a borrowing limit of $1 million.

• SBA 504 Loan: Designed to provide long-term financing to support economic growth within communities, SBA 504 Loans can be used to buy land, space and equipment, as well as build or renovate commercial property. They are available in amounts of up to $5 million, making them a better financing option for large-scale projects than SBA Express Loans.
• Business equipment loan: If you need new equipment to increase your business’s efficiency, consider applying for a business equipment loan of up to $100,000 to cover the cost.

Budgeting for a commercial property purchase or renovation

Although being a commercial property owner can come with a variety of benefits, carefully consider your options and seek professional advice to help ensure you make the best choice for your business. If you want to utilize a small business loan to buy or renovate commercial property, use a business loan calculator to get an idea of how much you’ll be able to borrow. Then, make a budget to decide what size loan you can afford, and speak with a lender to discuss your financing options.

Dedicated to your (Physical) success,  David

Some of this content was created and provided by RBS Citizens Financial Group

photo credit: Wolfgang Staudt via photopin cc