We recently closed a $2,300,000 SBA owner-occupied real estate loan for an addiction recovery center to purchase the building it had been leasing for just over a year.
This was a classic rent-replacement scenario — instead of continuing to pay rent to a landlord, the owners are now building equity in their own commercial property while stabilizing long-term occupancy costs.
On the surface, it looked like a strong SBA 7(a) real estate transaction – but the complexity was underneath.
What Is an SBA Owner-Occupied Real Estate Loan?
An SBA owner-occupied real estate loan allows business owners to purchase the commercial property they operate from, typically financing up to 90% of the purchase price.
The benefits include:
- Lower down payments compared to conventional commercial loans
- Floating rates that adjust quarterly based upon an index (not arbitrary)
- 25-year amortization
- No balloon payments
- Ability to replace rent with equity
For established businesses like medical practices, professional offices, and treatment centers, this structure can significantly improve long-term financial stability.
The Underwriting Challenge: 12 Affiliated Entities
The ownership group had 12 affiliated entities under common ownership. For many banks, that alone changes the appetite for the deal.
Why?
Because the SBA requires a global cash flow analysis for all owners holding 20% or more ownership. That means underwriting does not stop at the new loan request. It requires review of:
- Every affiliated entity
- All related business tax returns
- Personal financial statements
- Intercompany obligations
- All outstanding debt across the ownership structure
This level of analysis is mandatory for an SBA 7(a) loan. And for this deal in particular, that meant reviewing 36 tax returns, 12 sets of interim financials, 12 debt schedules, 12 ownership structures and sets of entity documents, reviewing the businesses and how they generated cash/paid each other… all while underwriting in a standard 60-75 day average closing timeline.
All this – and it was happening during the holiday season.
Why the SBA Requires Global Cash Flow Analysis
The SBA’s global underwriting standard exists to protect loan repayment. Specifically, it ensures:
1. Owners Do Not Have Excessive Personal Debt
If guarantors are overleveraged personally, they may need to extract discretionary funds from the new property or operating company — funds that should instead service the SBA loan.
2. All Affiliated Entities Are Healthy
If one business within the ownership structure is struggling, it may require support from another entity — creating financial strain across the portfolio.
3. Debt Levels Are Sustainable Across the Entire Global Structure
Excessive leverage in one entity can create systemic repayment risk for the SBA-backed loan. When 12 affiliated entities are involved, documentation multiplies quickly. This is where many lenders quietly step back.
How We Closed Within Standard SBA Timeframes
Despite the number of affiliated entities and the volume of documentation required, this $2.3M SBA owner-occupied real estate loan closed within standard SBA parameters. Two factors made that possible.
1. We Built Unique Processes and Systems for Evaluating Complex SBA Files
We process SBA 7(a) real estate loans consistently, and our internal systems are consistently upgraded to organize global financial reviews in the most efficient way possible. This is one reason why we rank in the top 1% of commercial loan closers nationwide.
2. Exceptional Borrower Responsiveness
This ownership group was highly organized. When documents were requested, they were delivered within hours — not days.
In SBA lending, response time directly impacts closing time.
A 24-hour delay per document request compounds quickly when dozens of items are required. Timelines expand exponentially when communication slows. This file moved because the borrowers stayed responsive, organized, and engaged.
Lessons for Multi-Entity Business Owners
If you are considering an SBA owner-occupied real estate loan and own multiple businesses, keep these lessons in mind:
– Be Strategic With Entity Formation
Multiple LLCs can provide tax or liability advantages — but they increase underwriting complexity. Ensure each entity serves a clear strategic purpose.
– Prepare for Global Review
Expect full transparency across all affiliated entities. Organization speeds approval.
– Responsiveness Determines Closing Speed
The lender can only move as quickly as the borrower responds. Communication and document readiness are critical.
The Bottom Line
This $2.3M SBA owner-occupied real estate loan closed because:
- The operating business was stable and necessary
- The ownership structure was transparent
- The global financial picture was strong
- The borrowers were highly responsive
- And we were equipped to handle a complex multi-entity file
Not every lender welcomes complicated SBA real estate underwriting. We’re built for it.
If you’re considering purchasing your commercial property through an SBA owner-occupied real estate loan, or navigating financing for a multi-entity ownership structure, let’s talk. Call (888) 959-1648 or email info@comcapfl.com to discuss your scenario.
Or get started online in just a few clicks — no unnecessary phone calls required.
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