Business owners and entrepreneurs who relocate their companies or start new ones are often taken aback by commercial real estate transaction expenses. The irony is that real estate transactions are primarily done to either save a business money or to locate in a spot that will help generate more revenue. But when it comes down to real estate transactions, you may need to raise some capital to get it done. To cut down on the out-of-pocket expenses for your transaction, here are three available options to assist you with your real estate financing.
Often an overlooked method of acquiring the capital needed for real estate financing, tax incentives can make a big difference for business owners. Credits may be earned based on your industry or location, your environmental footprint, job creation, technology, and much more. Tax deductions and exemptions can also be found at the federal, state and local levels. A good tax attorney can help ensure you take full advantage of these programs.
Low interest loans provide the fiscal flexibility you may need for your real estate financing. At the federal level, the U.S. Small Business Association (SBA) is an excellent resource to find low-rate loans. Consider the SBA 504 loan, which is specific to property purchases and construction, and the SBA 7a loan, which helps establish acquire, operate or expand your business. Locally, be sure to see if your state is one of the 24 currently participating in the federal State Small Business Credit Initiative. Most states also offer Capital Access Programs (CAPs) or other loan guarantee programs that help business owners access funds and/or collateral. Community based non-profit organizations in your region can also be extremely helpful in securing favorable loan terms.
Often established by smaller local governments or non-profit organizations, Revolving Loan Funds (RLF) provide funds to project managers or business owners who may lack collateral or credit history. RLF tend to have more flexible terms and credit reviews than traditional loans.
There are many grants offered at the federal, state and local levels that can help a business owner with real estate financing. These grants are typically designed to encourage investment in a neighborhood, or are rewards for environmentally sound facilities and operations. Note that federal grants are reserved for non-profits, state and local governments, or educational institutions and cannot be used for commercial entities. But at the state and local level, there are multiple grant opportunities that reward technological advances, international business development, job creation, employee training, and worker safety measures. In addition to government sponsored grants, national, regional and local foundations and non-profits provide a wide array of grant funding that may be used to supplement your business’s real estate financing.
Don’t let real estate financing be the barrier to locating your business at the optimal location. With a little research, you will uncover the grants, tax incentives, and loan options that can offset the real estate financing burden that comes with a commercial real estate transaction. In the end, these resources might be just what your business needs to achieve the growth you envision.