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Just Closed: $2.4M Conventional Loan for Daycare Property

Daycare property - Mesquite, TX

Liberty SBF closed a $2.4 million conventional loan in January on an 11,073 square foot daycare center in Mesquite, TX. The loan will provide funds for the acquisition of the property, which comprises one 8,928 square foot building and one 2,145 square foot building. Originally built in 2000, the property was expanded in 2004 and 2013 and features multiple classrooms, offices, kitchen and break area with pantry, storage, laundry facilities, numerous restrooms, and an indoor multi-purpose room. 

Established in 2000, the private daycare center provides early academic development for children from infancy to kindergarten. The business has shown rapid revenue growth over the last 3 years; although the center took a hit in 2020 due to COVID-related closures, the business bounced back in 2021 and is on track for an increasing revenue trajectory. 

Situated on a main thoroughfare with superior exposure, the property’s prime location contributed to an as-is valuation of $3.52 million. The Dallas MSA’s demographic trends will continue to drive growth in the market, allowing the property valuation to increase over the next few years. 


Interested in applying for a commercial real estate loan with Liberty SBF? Click below to learn more about our secure online application process.

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What Does “Owner-Occupied” Mean in Commercial Real Estate?

owner occupied real estate loans

The concept of owner-occupied commercial real estate – also known as owner-user commercial real estate – is key to understanding lending options to finance a new property for a business. The financial upsides of owning versus renting are many. An owner will build equity with every mortgage payment and asset appreciation increases value in the property over time.

But, just running a business out of a property does not automatically make it eligible for SBA 504 financing from Liberty SBF. In addition, the owner must occupy more than half—51% or more—of the building’s leasable space for the purposes of running their own business. A business that has the same ownership as a holding company that owns the property is also considered owner-occupied.

In this case, the borrower is eligible for a US government-backed SBA 504 loan that gives you access to better financing than any other option.

But what happens if you still need a loan but do not expect to occupy more than half of the available square footage of the commercial property

Liberty SBF’s Conventional loan is a great alternative. Our Conventional loans allow occupancy of the borrower’s business to be as little as 30% of the total square footage of the commercial property.

Asset types that qualify for owner-occupied financing include industrial buildings, flex, retail, office properties, and professional medical offices.

Special-use properties such as self-storage, assisted living facilities/skilled nursing facilities and other healthcare properties, day care, sports facilities, and event centers also qualify. A multifamily property is not eligible for owner-occupied financing, but mixed-use buildings and hotels do qualify. Learn more about hotel property loans.

In 2010, the SBA deemed some businesses with rental income – also called passive income – eligible for its programs. This gave self-storage operators the opportunity to take advantage of the SBA 504 loan’s many benefits. Read more about self-storage facility financing.

The SBA 504 loan provides small businesses that will be owner-occupiers access to the same type of long-term, fixed-rate financing enjoyed by larger firms. Interest rates are equivalent to favorable bond market rates. You qualify for the loan program when you have sufficient liquidity and net worth, and plan to occupy more than 51% of the facility you are purchasing for SBA 504 loans or 30% for Conventional financing.

As an owner-user, you are considered to be a lower risk for the lender, who is assured that you will be committed to the property both as landlord and as chief occupant.

Liberty SBF is a specialist in SBA 504 and Conventional loans. We believe that our owner-occupied loan programs have advantages that no other loan can equal, including:

  • Up to 90% LTV (loan-to-value ratio) financing,
  • Low fixed rates, and
  • Terms up to 25-years

Interest rates are low today, and now is the time to lock in your fixed-rate commercial real estate loan. When you work with an experienced lender like Liberty SBF, you can be confident that we will anticipate any problems and help you overcome any potential obstacles.

We can get the job done in 45 days or less. Contact us today.

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Office Property Loan Closed: $3.9MM Conventional Refinance Loan

Liberty SBF provided a $3,900,000 Conventional loan to refinance an office building located in Santa Clara, CA for a company that provides design services for the semiconductor industry. The property is a two-story, 17,250 SF office building. The borrower occupies the second floor and leases out the first floor.

The appraised value of the property came in at $6MM, resulting in a Liberty 1st Lien LTV of 65%. The company helps large digital clients like to develop next generation flagship product lines, including mobile devices, complex routers/switches, consumer products, storage devices, and microprocessors processors.

How can we help?

Liberty SBF offers personal service for SBA 504, Conventional & Bridge loans for owner-user properties across the US. We’d love to help you.

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Industrial Property Loan Closed: $1.3MM Conventional Acquisition Financing

Liberty SBF provided a $1,330,000 Conventional loan to acquire a warehouse located in South San Francisco, CA for a wholesaler of souvenir/gift products. The property is a 4,800 SF industrial condominium unit that the borrower will 100% occupy. The Appraiser concluded an as-is value of $1.9MM, resulting in a Liberty 1st Lien LTV of 70%.

The company sells greeting cards, postcards, fashion bags, stationery, bookmarks, journals, and other gift products and customized items to regional and national retail stores and online direct to consumers. The company had outgrown its previous space and moved to the subject property in order to accommodate its current and anticipated growth.

How can we help?

Liberty SBF offers personal service for SBA 504 and Conventional & Bridge loans for owner-user properties across the US. We’d love to help you.

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Industrial Property Loan Closed: $4.2MM Conventional Refinance

Liberty SBF provided a $4,160,000 Conventional loan for the refinance of an industrial property located in Brooklyn, NY for an online retailer of bicycle products, parts, and accessories.

The borrower operates their business out of a warehouse and office located on the first floor of the 9,704 SF two-story building. A tenant runs a dance studio on the second floor. The company has 59% occupancy of the total square footage of the property to run its business., primarily selling its inventory on Amazon where it has extensive experience operating on the platform and using Amazon’s fulfillment services.

How can we help?

Liberty SBF offers personal service for SBA 504 and Conventional loans for owner-user properties across the US. We’d love to help you.

Get Your Deal Quoted

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Mixed-Use Property Loan Closed: $590,000 Conventional Acquisition

Liberty SBF provided a $589,856 Conventional loan for the acquisition of a mixed-use property located in Brooklyn, NY. The appraised value of the property resulted in a Liberty 1st lien LTV of 51.7%. The Property is a 2,470 SF, two-story industrial/office property in Brooklyn. The first floor of the Property is industrial space and the second floor is office space. The Property is zoned and functional for warehousing, manufacturing, retail, and office uses.

The borrower will fully occupy the property. The company manages its client’s construction process from beginning to end, ensuring both quality and compliance.

How can we help?

Liberty SBF offers personal service for SBA 504 and Conventional loans for owner-user properties across the US. We’d love to help you.

Get Your Deal Quoted

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Warehouse Property Loan Closed: $2.2MM Conventional Acquisition

Hangar exterior with rolling gates. 3d illustration

Liberty SBF has closed a first mortgage loan totaling $2.2MM for the acquisition of a 7,500 SF warehouse in San Francisco, CA. The building includes three suites which is occupied by two other tenants and the borrower.

The borrowing entity is a halal butcher shop specializing in the processing and sale of poultry. They will use most of the property to sell a variety of poultry to retail customers and local restaurants in the Bayview neighborhood and greater San Francisco Bay Area.

How can we help?

Liberty SBF offers personal service for SBA 504 and Conventional loans for owner-user properties across the US. We’d love to help you.

Get Your Deal Quoted

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Hotel Property Loan Closed: $2.2MM Conventional Loan

Liberty SBF has closed a first mortgage loan totaling $2.2MM for the refinance of an AmericInn by Wyndham, a three-story, 69-room, limited-service hotel located in Mounds View, MN. The borrower will use the funds to restructure the ownership of the property.

The AmericInn by Wyndham in Mounds View, in the growing Minneapolis MSA, opened in 2002, and underwent a $1 million+ renovation in 2018. Connected to Mermaid Entertainment & Event Center, the National Sports Center, and various corporate offices, the hotel benefits from both local and regional demand.

How can we help?

Liberty SBF offers personal service for SBA 504 and Conventional loans for owner-user properties across the US. We’d love to help you.

Get Your Deal Quoted

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Closed: $1.5MM Industrial Conventional Loan

Liberty SBF has closed a $1.465MM Conventional loan for the refinancing of a one-story, 12,700-square foot industrial property, located within the Rancho Center Industrial Park in Rancho Cucamonga, CA. The company fully occupies the space. The loan will also fund equipment acquisition and additional working capital.

The Southern California property is located 15 miles north of Riverside, CA and 37 miles east of Los Angeles, in the fast-growing Inland Empire MSA, served by Interstate 10 and 15 freeways. The company services manufacturers with a specific niche market in the pool and spa industry, in addition to the aerospace, furniture, construction, lumber yard, and boat and RV industries.  The founders and owners have successfully operated the company for more than 30 years. They acquired the property in 2006.

How can we help?

Liberty SBF offers personal service for SBA 504 and Conventional loans for owner-user properties across the US. We’d love to help you.

Get Your Deal Quoted!

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Closed: $3.39MM ALF Conventional Loan

Liberty SBF has closed a $3.39MM conventional loan for the refinancing of a 16-unit adult residential facility located in Vallejo, CA. The loan will refinance the existing debt on the property, and provide funding for the borrower’s acquisition of a 49-bed assisted living facility in Mill Valley, CA.

Built in 1965 and with 100% occupancy, the 16-unit, 32-bed transitional facility for mentally challenged adults prepares residents for independent living. The appraised value for the Mill Valley property was $7.0MM, excluding business value of $700K. Liberty’s 1st Lien represents an as-is LTV of 48.5%. The principal guarantors have more than seven years of experience in the development, rehabilitation, and management of senior/adult care facilities.

How can we help?

Liberty SBF offers personal service for SBA 504 and Conventional loans for owner-user properties across the US. We’d love to help you.

Get Your Deal Quoted!

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Closed: $3.53MM ALF Conventional Loan Refinance

Liberty SBF has closed a $3.53MM conventional loan for the refinancing of two assisted living properties in Saint Cloud and Palatka, FL by an experienced owner/operator, Aleph 1 Realty, LLC. The properties are the two-story, 40-bed Homestead Retirement Home in Saint Cloud and Kiva of Palatka, a one-story, 40-bed assisted living facility.

Paramount ALF, Inc. is the operating company that has run both facilities since 2016, when the borrower purchased the properties. Built in 1909, the two-story, 40-bed Homestead Retirement Home in Saint Cloud is 100% occupied. Kiva of Palatka, built in 1986 and 2003, is 70% occupied. The borrower, Aleph 1 Realty, LLC, has extensive experience as owner and operator in the assisted living industry.

The loan enabled the borrower to make functional improvements of both properties, and to buy out a business partner’s remaining interest.

How can we help?

Liberty SBF offers personal service for SBA 504 and Conventional loans for owner-user properties across the US. We’d love to help you.

Get Your Deal Quoted!

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Liberty SBF Closes Conventional Loan Refi for Industrial Property in CA

CONVENTIONAL – $804K – INLAND EMPIRE, CA

A commercial landscaping company in the Inland Empire, CA recently refinanced an SBA 504 loan with a very competitive fixed-rate Conventional loan from Liberty SBF.

The owners used the proceeds to pay off an existing lien on an industrial property and took cash out for working capital to pay down short-term debt and purchase new vehicles and equipment.

How can we help?

Liberty SBF offers personal service for SBA 504, bridge and conventional loans. We’d love to help you.

Let’s Talk. 

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Protect Your Bottom Line – Refinancing to a Fixed-Rate CRE Loan

Rates may be low for now but business owners sitting on debt tied to an adjustable rate should be aware. If you’re a broker or business owner, you can protect your clients or yourself with a fixed-interest SBA 504 or Liberty SBF Conventional loan.

Variable vs. Fixed Rate

Before we get into refinance options, it might be good to compare the two types of rates and show the cost benefit. With a variable rate mortgage tied to the Prime Rate, like an SBA 7a loan, the monthly payment will rise as rates go up. According to the SBA, there is about $113B in 7a loans outstanding making up a major portion of the owner-user debt on commercial real estate in the U.S. Tracking the Prime Rate you can see how it’s risen over the last three years.

On the other hand, the rate on an SBA 504 loan is fixed so that, for the term of the loan, the rate does not change. Using a $1MM mortgage as an example, let’s compare the payment on an adjustable SBA 7a loan tied to the Prime Rate to that of a fixed-rate loan.

  Fixed Rate (Today) 7a (Initial Rate) 7a (Today)
Loan Amount $1M $1M $1M
Rate 5.75% 6.00% 7.75%
Monthly Payment $6,291 $6,443 $7,553
Additional Payment vs. Fixed   $152 $1,262

If your SBA 7a loan was based on the Prime Rate with a margin of 2.25% in 2017 your initial rate would have been 6%. (At the time, the Prime Rate was 3.75%. A margin is the amount that your lender adds to an index rate like Prime to calculate your mortgage rate. So Prime + 2.25% gives you your initial rate of 6%.)

Today, the Prime Rate sits at 5.5% so in two years your rate would have adjusted to 7.75%. (5.5% + 2.25% = 7.75%)

A business owner would see a significant increase in their monthly payment in a very short time, from $6,443 to $7,553, a $1,262 per month increase.

Comparing the above scenario to a fixed rate, a borrower would see a savings of $1,262 per month in a fixed rate loan when compared to the adjustable SBA 7a. And, the longer you wait, the more it might cost you or your client as rates continue to rise.

As we mentioned before, you have options.

Refinance to an SBA 504 loan

In 2016, an act of Congress made the debt refinance aspect of the fixed-rate SBA 504 Loan Program permanent. The enhancement was made to help small business owners ease their financial burden. As we saw above, a long term fixed-rate loan can help refinance debt from adjustable rate loans with significant savings to borrowers. The refinancing loan is structured like SBA’s traditional 504 loan.

A borrower can leverage up to 90% of the value of a commercial property to pay off qualifying debt. An SBA 504 loan is made up of a first and a second lien. A lender provides up to 50% of the value of the property on the first loan and a non-profit organization authorized by the SBA called a Certified Development Company (CDC) funds the government guaranteed second loan up to 40%.

The refinance can include cash-out on top of paying off a mortgage to cover eligible business operating expenses such as salaries, rent, utilities, inventory, or other obligations of the business but the maximum loan-to-value would then be lowered to 85 percent. The maximum cash an owner can take is 20% of the appraised value of the property. (To find out even more about the SBA 504 refinance program read the article we published at the time in Entrepreneur.)

Let’s break it down using a property appraised at $5MM as an example. The owner wants to refinance a mortgage on a commercial property plus working capital.

Property Value Mortgage Payoff Maximum Working Capital
$5,000,000 $3,250,000 $1,000,000

When an SBA 504 Doesn’t Work

The SBA 504 refinance loan is a great way for business owners to fix in a long-term rate on a commercial property and provides plenty of other great benefits. There are some instances where an SBA 504 loan can be ineligible.

First, an SBA 504 loan cannot be used to refinance an existing government guaranteed loan like another SBA 504 loan or an SBA 7a loan. Only conventional loans are eligible, like a bank loan or CMBS.

Also, if a business needs more than 20% LTV in working capital then the SBA 504 Loan Program is ineligible.

As an alternative, there are conventional owner-user loans programs available and each one is slightly different. We will use Liberty SBF’s Conventional Loan Program as an example, which was created specifically to meet the needs of business owners who can’t go with an SBA 504 loan refinance.

Refinance to a Conventional loan

With a majority of the variable rate debt on owner-user commercial properties coming from the SBA, the most common scenario is when a property owner needs to refinance an SBA 7a loan to a fixed rate. Since the SBA 504 program is ineligible to refinance a government loan, a conventional loan will do the trick.

Liberty SBF’s Conventional Loan Program was designed with this particular situation in mind and in almost every way it is identical to the SBA 504 loan. The property still needs to be at least 51% owner-occupied to be eligible and an owner can still take cash-out for business expenses if needed.

The maximum LTV is a little lower on a conventional loan across the board. Liberty SBF has a maximum 70% LTV on multi-use property types and 65% on hotels and special-use.

While all loans are subject to underwriting approval, Liberty SBF’s conventional loan is a more flexible product for deals outside of SBA 504 eligibility.

The cash-out portion allows for one of the largest variances. A Liberty SBF conventional loan has no maximum LTV restrictions on cash-out as long as it is within the maximum LTV range of the property type. When compared to the SBA 504, which allows only up to 20% LTV on the cash-out portion of a loan, this is a huge advantage for business owners who need to draw more capital out of a property.

With the SBA, working capital must be specifically tied to expenses that are incurred within the business being run from the property. Liberty SBF’s conventional loan allows proceeds to be used for other approved purposes, like the purchase of another owner-occupied business.

Of course, the main focus of the program is to refinance out of adjustable rate SBA 7a debt into a fixed rate option and help business owners control monthly expenses, something the Liberty SBF Conventional Loan program does very well.

It’s Time to Refinance to a Fixed Rate

We’re not making any predictions here but ultra-low interest rates can’t last forever. If past is prologue then rates will rise again, along with a business owners’ monthly cost of capital.

Companies need capital to grow. Both the SBA 504 and the Liberty SBF Conventional loan programs allow owners to take advantage of the equity in a commercial property at a fixed-rate to control rising monthly payments and expand their businesses.

Talk to us about options to refinance a rising adjustable rate commercial real estate loans into one of our fixed rate programs. And, as always, we’re more than happy to help.


Contact Liberty SBF today. Email info@i.libertysbf.com or call (213) 297-5747.

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