Whether you occupy the property or rent it out changes which lenders will talk to you, what they underwrite on, and which programs you can access.
Understanding which lane you're in : and that some properties straddle both : prevents weeks of misdirected applications.
Owner-occupied: the business's cash flow is the story
When the business occupies the building, lenders underwrite the business: its revenue, stability, and ability to support the payment. Programs like the SBA 504 exist specifically for this lane, sometimes with lower equity requirements and longer terms.
Owner-occupancy usually comes with a threshold : a minimum share of the building the business must occupy : and leasing out too much space can affect eligibility.
Investment property: the property's income is the story
For rentals and commercial space held for income, lenders underwrite the property: rent roll, occupancy, operating expenses, and debt service coverage. The borrower's finances and experience still matter, but the property carries the decision.
Mixed-use and in-between situations
A building with the owner's business downstairs and tenants upstairs gets underwritten on a blend. Expect the lender to evaluate both income streams and apply occupancy thresholds. These deals are financeable : but they take the right lender, not the first lender.
Frequently Asked Questions
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