Middle child. Stuck between the “responsible” eldest and the “baby.” According to psychological lore, a middle child can feel undervalued and overlooked, a stereotype often disputed. My sister is the middle child in my family, and she certainly has blown the “middle child” stereotype out of the water.

As is the case with families, so it goes with buildings and SBA loans. I’m remembering Evelyn, a client whose SBA loan was stuck smack-dab in the middle:

Evelyn operated a downtown pizza parlor. She’d been leasing the building for nearly five years and had built up a faithful clientele. Her lease was coming due and the landlord would not extend. What’s that they say about “closing a door and opening a window?” The restaurant across the street was for sale. But the seller also owned the buildings on either side and would only sell all three as a package. “No problem,” her banker said. “Your cash flow is good and so’s your credit. Commercial property values are going up, up, up. You should have no problem qualifying.”

Stuck in the middle. Everyone was surprised when I said the project was ineligible for an SBA loan because it didn’t meet the Agency’s occupancy requirements.

EVELYN. Richard, you said I had to occupy at least 51% of the rentable square footage of the building I was buying, Well, I will be occupying 3,000 sq ft. and the buildings on either side are each 1,000 sq ft. I’m buying 5,000 sq. ft and occupying two-thirds of it. What kind of math are you using to say I won’t be occupying 51%?

ME, GETTING EVELYN’S LOANS UNSTUCK. Evelyn, I understand your point. And if you were buying just one building, there would be no problem. But you’re buying two buildings that won’t be used by your business and SBA would consider that investment property.

So why don’t we finance this through two loans: The SBA loan to buy the property for your business, and an investment real estate loan to buy the other two buildings? In fact, let’s get your banker on the phone right now and I’ll explain.

What’s your banker’s number?

Stuck in the middle of an SBA loan situation? You’ve got my number.

EVEN BETTER: ATTENDING NADCO’S SPRING SUMMIT? JRB is here, too. Stop by our booth and say hello.

Richard Jeffrey
Senior Associate, CDC/504 Programs
Head Underwriter

855.JRB.4.SBA (855.572.4722)