Commercial Real Estate Financing: SBA Loan Options and Leasing Guidance

The Small Business Administration offers two primary loan programs for commercial real‑estate purchases. SBA 7(a) loans, the most widely used, can fund up to US$5 million with terms of up to 25 years and are suitable for owner‑occupied properties, working capital, and other business needs. SBA 504 loans target larger projects, providing up to US$15 million for owner‑occupied or investment real‑estate and heavy equipment, also with 25‑year terms.

Separately, businesses evaluating whether to buy or lease space should assess growth projections, budget, and functional requirements. Average lease terms range from three to ten years, and fit‑out costs can run US$750‑US$1,500 per square metre, roughly equivalent to one to one‑and‑a‑half years of rent at US$500 per square metre. Leases often allow interior modifications but may require restoration at lease end, posing potential cost risks. Decision‑makers are advised to align space size, layout, and amenities with operational goals and employee needs.