If you are in the market to buy a piece of commercial property but don’t have a large cash reserve, there are options to close the deal with buyer funding of only 10% of the purchase price.

First, if you own a small business and plan to purchase the property and occupy at least 51% of the building as the place of business, check with your local Certified Development Companies (CDC) for an SBA 504 loan, the “50 40 10 loan” is structured that a bank provides 50% of the loan, the CDC provides 40% of the loan with an SBA guarantee and buyer contributes 10% of the purchase price. Check with the CDC for all requirements for qualification of an SBA 504 loan.

Second, check with the seller to see if they are willing to provide seller financing. If you can secure a bank loan of 60% of the purchase price and pay 10% out of pocket, see if the seller is willing to finance the remaining 30%. In this way, the seller still receives most of his sale price at closing and benefits from the installment sale.

Third, shop for a mezzanine loan on top of the bank loan to lower your out-of-pocket payment at the closing. In all scenarios, careful cash flow planning is essential. Reach out to my office for consultation and see how we can help!