Owner Occupied Commercial Real Estate Loans - Sunwest Bank
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Owner Occupied Commercial Real Estate Loans

Purchasing commercial real estate for your business is a big step towards growth and stability.  With an owner-occupied commercial real estate loan from Sunwest Bank, you can customize and control your company’s workspace while building long-term equity.

An owner-occupied/ owner-user loan is specifically designed for properties where over 51% of the space is used by the borrower’s business. For instance, if you are a business owner and purchase a 5,000-square-foot building, at least 2,550 square feet would need to be occupied by your company to meet owner-occupied criteria. The remaining space can be leased out to supplement your income.

Compared to investment loans, owner-occupied financing offers more flexibility since the borrower and tenant are aligned. These loans also tend to lower lenders’ risk, resulting in better terms for borrowers. There are many advantages to securing an owner-occupied commercial property for your enterprise.

The Benefits of Owning Your Own Space

Having the authority over your own workspace allows tremendous flexibility and control over your business environment. Commercial ownership also builds tangible equity and contains key depreciation and interest tax advantages.

Grow Your Equity Over Time

As you pay down the mortgage principal each month, you steadily build equity in the property. In time, the real estate will be fully yours. In the meantime, you can borrow against equity for renovations or operating capital.

Claim Tax Deductions

Occupying over half the space you own means the IRS views your real estate primarily as a place of business. You can write off associated expenses like property taxes, maintenance, utilities, insurance, and depreciation.

Get Better Loan Terms

Since you have the motivation to keep up the property, lenders offer owner-occupied loans with just 10-25% down, lower rates, and more flexible terms compared to investment property financing, usually requiring 25-40% down.

Customize Your Environment

Owning the space allows you to renovate, reconfigure, decorate, and modify it to perfectly suit your business needs and brand image without landlord interference. It creates a pride in ownership, an integral part of your business.

Supplement with Rental Income

Any unused space can be leased to reliable tenants, providing monthly income that helps offset your mortgage payment and operating costs.

Navigating the Owner-Occupied Loan Process

From application to closing, getting an owner-occupied loan follows a trajectory similar to a residential mortgage. Here’s what to expect:

  • Most lenders thoroughly vet the property, assessing its market value, condition, financials, neighborhood, and ability to support your business operations. You’ll provide financial records, business documents, taxes, and a comprehensive loan application.
  • Next comes underwriting, where the lender scrutinizes risk factors before approving the loan. Expect to put 10-25% down, depending on the lender, loan type, and your credit profile. Borrowers with larger down payments typically get better terms.
  • Upon approval, you’ll get a loan estimate outlining proposed interest rates, fees, and closing costs. Carefully review this information before accepting the offer. There is usually a 30-90 day post-closing occupancy requirement.

Financing Options for Owner-Occupied Properties

Sunwest Bank is an experienced and preferred lender that offers a range of loan programs suitable for owner-occupied commercial real estate:

  • SBA 7(a) Loans – Offered by the Small Business Administration, these loans allow 10% down payments and up to 30-year repayment terms. This is ideal for purchasing, constructing, or refinancing owner-occupied property.
  • Conventional Loans – Private lenders like banks and credit unions offer these quicker-to-close loans with 20-25% down and 5-10 year terms. There are fewer borrower protections than SBA options.
  • USDA B&I Loans – For rural properties, USDA provides low-rate loans with up to 100% financing and 30-year terms for purchase, construction, expansion, equipment, and refinancing.

Why Sunwest Bank Stands Out

With over 50 years of business experience, Sunwest Bank has the business loan expertise to guide you through the complex process of financing owner-occupied commercial real estate. Our seasoned lending team takes the time to understand your objectives and tailor solutions to meet your needs.

We possess deep knowledge of the local real estate markets where we lend. We understand the importance of a building to a borrower. Our streamlined underwriting and in-house servicing mean we can provide quicker approvals and turnaround times with competitive rates versus large national lenders.

Whether you’re buying your first building, expanding, or refinancing, we make financing stress-free and affordable. Contact us to learn more about achieving your commercial property ownership goals with an owner-occupied loan from Sunwest Bank.