Can an SBA loan buy a mixed-use building with apartments?
Short answer
Yes, if your business meets the occupancy test. Space zoned residential can be rented out within the limits. But SBA says apartment buildings and mobile home parks are not eligible. Source: SOP 50 10 8.1, Sec. A, Ch. 1, Para. E and Ch. 3, Para. C.
Yes, when your business is the main occupant. SOP 50 10 8.1, Section A, Ch. 3, Para. C, addresses existing buildings zoned for both commercial and residential use. Subject to the occupancy limits, you may occupy the residential space or rent it to a third party.
A property that is simply an apartment building is different. SBA says apartment buildings and mobile home parks are not eligible (Section A, Ch. 1, Para. E).
The occupancy math still applies
In an existing building, your business occupies at least 51% and up to 49% can be leased. Residential tenants count toward that limit.
Living in the building
Residential space you occupy counts as occupied by the business only if it meets the SOP's residential space test and zoning. That test applies when the nature of the business requires a resident owner or manager. The space must be appropriate to the needs of the business and cannot exceed 49% of the total property. The SOP's example is a livestock operation that needs someone on site at all times.
Other limits
- Loan proceeds cannot improve residential space leased to third parties.
- Residential facilities that are not licensed as nursing homes or assisted living, and provide no healthcare or medical services, are not eligible.
The SOP does not list which businesses require a resident owner. Your lender decides that from the facts.
Ask lending partners about your loan
Tell us the amount you need and what it is for. We refer you to lenders that may fund businesses like yours, and it costs you nothing.
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