Acquisition Financing for Owner-Operators: How to Secure the Right Loan to Buy Your Business Property

For owner-operators, purchasing commercial real estate is a smart way to build stability, control costs, and invest in the future of their business. Owning your property means no more rent increases or lease uncertainties—and it allows you to tailor your space to your specific operational needs.
However, navigating acquisition financing can be complex. Unlike investor loans, owner-operator loans require a unique approach that considers both your business financials and the property itself.
In this post, we’ll explain the essentials of acquisition financing for owner-operators, the types of loans available, what lenders look for, and how you can prepare to secure financing for your next property purchase.

What Is Acquisition Financing for Owner-Operators?
Acquisition financing refers to commercial loans used specifically to purchase real estate where your business will operate. This differs from investment property loans because:
Lenders prioritize your business’s financial strength, not just the property value
You typically must occupy at least 51% of the space
Loan options include SBA-backed loans, conventional mortgages, bridge loans, and private credit
This financing helps businesses preserve working capital by spreading the cost of ownership over time while gaining equity in a valuable asset.

Why Should Owner-Operators Consider Buying Their Property?
Owning your commercial space offers significant benefits:
Cost Control: Fixed mortgage payments protect you from rent increases.
Equity Building: Your monthly payments contribute toward ownership and long-term wealth.
Tax Advantages: Deduct mortgage interest and depreciation to reduce your taxable income.
Customization: Adapt the space to your business requirements without landlord restrictions.
For many owner-operators, purchasing is a long-term strategic decision that supports growth and stability.

What Do Lenders Look For?
Lenders will carefully evaluate both your business and the property. Key factors include:
Business Financial Health: Demonstrate consistent profitability with a Debt Service Coverage Ratio (DSCR) typically between 1.2x and 1.4x, plus strong liquidity and multiple years of tax returns.
Property Value and Condition: The appraisal must support the purchase price, and the property should be zoned appropriately for your business use.
Down Payment: Most loans require 10–30% down; SBA loans often allow as little as 10%.
Occupancy: You must occupy the majority of the property to qualify for owner-occupied loan programs.

Loan Options for Owner-Operators
Here’s a quick overview of common acquisition loan types:
Loan Type
Max Loan-to-Value
Term Length
Key Features
SBA 504
Up to 90%
10–25 years
Low down payment, fixed rates
SBA 7(a)
Up to 85%
Up to 25 years
Flexible use, working capital
Conventional
70–80%
5–20 years
Competitive rates, stricter credit
Bridge Loans
Up to 75%
6–24 months
Quick closing, higher rates
Private Lending
Varies
Flexible
Alternative for non-bankable borrowers

Each loan has its own advantages depending on your financial profile and timeline.

Example: Using an SBA 504 Loan to Buy Your Business Space
Imagine a growing dental practice purchasing a $2.5 million office condo. They might structure financing as follows:
$1.25 million SBA CDC loan
$1 million bank loan
$250,000 down payment
This arrangement allows them to secure low, fixed rates with a 25-year amortization schedule, preserving cash for business operations while building equity.

Tips to Prepare for Acquisition Financing
Get Prequalified Early: Understand how much you can borrow before making an offer.
Organize Financial Documentation: Prepare at least 2 years of tax returns, profit and loss statements, and balance sheets.
Work with Professionals: A commercial real estate finance advisor or attorney can guide you through loan options and negotiations.
Shop Multiple Lenders: Loan terms and eligibility can vary widely—compare offers carefully.

Ready to Own Your Business Property?
Acquisition financing offers owner-operators the chance to secure a valuable asset while supporting business growth and stability. With the right preparation and guidance, you can navigate the loan process confidently and find the financing solution that fits your needs.
Contact us today to discuss how we can help you identify and secure the best acquisition financing for your business property.