Last updated: November 2026
Commercial loans are underwritten on the property's income or your business's cash flow, not just your personal income, and they often have shorter terms, larger down payments and balloon payments. For owner-occupied property, SBA 7(a) and 504 loans can lower the down payment. The 504 pairs a bank loan with a Certified Development Company loan.
If you've only financed a home before, a commercial loan will feel different. Here's how it works and where SBA loans fit.
This guide is part of our guide to buying or leasing commercial property in Myrtle Beach.
In this guide:
- How is a commercial loan different from a home loan?
- What is an SBA 7(a) loan?
- What is an SBA 504 loan?
- Which SBA loan fits your purchase?
- How do you prepare for a commercial loan?
- What do commercial lenders look at?
- What costs come with a commercial loan?
- What terms should you know?
- What should investors know?
- What else do people ask about this?
- Ready to talk about commercial space on the Grand Strand?
How is a commercial loan different from a home loan?
The lender is underwriting a business, not just a borrower. For an investment property, the lender focuses on the property's net operating income. For an owner-occupied building, it focuses on your business's cash flow, along with your personal credit and finances.
Other common differences:
- Larger down payments for conventional commercial loans.
- Shorter loan terms, sometimes with a balloon payment.
- Personal guaranties from owners.
- Prepayment penalties.
- Appraisals, environmental reports and surveys required by the lender.
Terms vary by lender and property, so compare offers.
What is an SBA 7(a) loan?
The 7(a) is the SBA's main small business loan program. According to SBA.gov, 7(a) loans can be used for a range of purposes, including buying, building or improving real estate, and the maximum loan amount is $5 million. The SBA guarantees part of the loan, which can make lenders more willing to lend.
You apply through an SBA-approved lender, not the SBA directly. Eligibility depends on your business size, type and other requirements.
What is an SBA 504 loan?
The 504 program is built for major fixed assets like real estate and equipment. SBA.gov describes it as a loan made through Certified Development Companies, often called CDCs. In a common 504 structure, a bank lends about half the project cost, the CDC lends up to 40 percent backed by the SBA, and the borrower contributes at least 10 percent.
504 loans are for owner-occupied property, and the SBA sets rules on how much of the building the business must use. Check SBA.gov for current limits and occupancy rules.
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Which SBA loan fits your purchase?
It depends on your project. The 504 is aimed at real estate and long-term equipment. The 7(a) is more flexible and can combine real estate with working capital or other needs. Rates, fees and terms differ, and a lender can walk you through both.
If you're also deciding whether to buy at all, read should you lease or buy your business space.
How do you prepare for a commercial loan?
Get your paperwork ready before you make an offer. Lenders commonly ask for business and personal tax returns, financial statements, a business plan or projections, a debt schedule and details on the property.
Talk to a lender early so you know what you can afford and how long approval may take. Build that time into your due diligence and financing contingency.
What do commercial lenders look at?
Lenders want to know the loan will be repaid from the property or the business. They usually look at debt service coverage, which compares income available for debt payments with the loan payments. They also look at loan-to-value, your credit, your experience running the business, and your liquidity after closing.
For owner-occupied property, lenders may review several years of business financials. Newer businesses can still qualify in some cases, often with more equity or a stronger guaranty. Ask lenders what they'd need for your situation.
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What costs come with a commercial loan?
Expect more third-party reports than a home loan. A commercial appraisal, environmental review, survey, title insurance and legal fees are common, along with lender fees. SBA loans have their own guarantee fees. Ask each lender for a full list of expected costs so you can compare offers fairly.
What terms should you know?
- Debt service coverage ratio: Income available to pay debt divided by the loan payments. Lenders set their own minimums.
- Loan-to-value: The loan amount divided by the property's appraised value or price.
- Certified Development Company (CDC): A nonprofit partner that provides the SBA-backed portion of a 504 loan.
- Balloon payment: A large final payment due when a loan matures before it's fully paid off.
What should investors know?
Investment property usually doesn't qualify for SBA real estate programs. Investors typically use conventional commercial loans from banks or credit unions, or other financing. The property's NOI and debt service coverage are central. See what a cap rate is.
Related guides:
- Should I Lease or Buy My Business Space in Myrtle Beach?
- What's a Cap Rate, and How Do Investors Use It in Myrtle Beach?
- What Is Due Diligence on a Commercial Property, and How Long Should I Ask For in Myrtle Beach?
- How Do I Buy or Lease Commercial Property in Myrtle Beach?
What else do people ask about this?
Can I buy a commercial building with an SBA loan?
Yes, if your business will occupy it and meets the program's requirements. SBA 7(a) and 504 loans can both be used for owner-occupied real estate.
What is the maximum SBA 7(a) loan?
SBA.gov lists the 7(a) maximum as $5 million. Check SBA.gov for current limits.
How much down payment does a 504 loan require?
In a common structure, the borrower contributes at least 10 percent, though it can be more depending on the project and business.
Do commercial loans have balloon payments?
Many do. The loan may amortize over a longer period but come due sooner, requiring a refinance or payoff.
Can I use an SBA loan for an investment property?
Generally not. SBA real estate programs are for owner-occupied property.
This article is general information, not legal, tax or financial advice. Rules and requirements change. Talk to a South Carolina attorney, CPA or lender about your situation, and confirm current requirements with the agency involved.
Ready to talk about commercial space on the Grand Strand?
Whether you are leasing your first space, buying a building for your business or adding an investment property, a short call with our team can help you sort out the options and the next steps. No pressure, and no commitment.