Buying your own building is often the best move a growing business makes — you stop paying a landlord and start building equity. But commercial real estate (CRE) financing works differently from a working-capital loan, and knowing the basics saves you months.
The two main paths
- SBA 504 — built for owner-occupied real estate. Low down payment (often 10%), long terms, below-market rates. The trade-off is paperwork and time.
- Conventional commercial mortgage — faster and more flexible, usually 20–30% down, shorter terms, slightly higher rates.
What lenders actually look at
Beyond your credit, CRE lenders weigh the property's value and income, your business's ability to cover the payment (debt-service coverage), and whether you'll occupy at least 51% of the space. Clean books and two years of returns move this fast.
Why owners do it
A fixed mortgage payment replaces rising rent, the building appreciates, and the interest is typically deductible. For a stable business, owning beats renting over almost any 10-year horizon.
If you've outgrown your lease — or your landlord keeps raising the rent — it's worth running the numbers. A short conversation tells you whether you'd qualify today.