Did you know that small business financing can be used for property not owned by the small business?
Whether you’re a new small business owner or a seasoned ‘veteran’, a certified lender can help you make SBA financing work for your commercial real estate arrangement. There are many reasons for a small business to avoid real estate ownership including tax breaks, legal advantages, or the use of outside capital.
In the case of a recent client, a separate small business can be formed to purchase commercial real estate to be leased to the business. This sort of situation is made possible through the formation of eligible passive companies, which are separate entities that mirror the ownership of the operating company. While the U.S. Small Business Administration does allow this process to work, there are several requirements that eligible passive companies must adhere to, so make sure to meet with a lending professional to learn more.