Single Purpose Property
As its name implies, a single-purpose property is commercial real estate comprised of improved land with a building that has a single purpose or use as opposed to a building that has a multi-purpose or use.
The primary determining factor whether a property is considered single-purpose has to do with the design of the building and not the activity of the occupant though these often do coincide.
For example a gas station has only one possible purpose and use. Therefore, different types of businesses or organizations may not occupy a gas station building and immediately begin to use the space without making significant alterations to the buildings configuration.
Therefore, single-purpose properties are more difficult to sell or lease and pose higher risk to lenders and the SBA. As we’ve learned in the past, higher risk means higher rates and less favorable terms.
As a result, single-purpose properties may be financed in most cases only up to 85% loan to value by the SBA 504 and 7(a) loan programs instead of 95% like multi-purpose properties.
Popular types of single-purpose properties include: Churches, Gas Stations, Car Washes, Convenience Stores, Schoools, Residential Care Facilities and Hospitality including hotels, motels, hostels etc.
My SBA Loan Pro
The My SBA Loan Pro Podcast is hosted by Your SBA Loan Pro, Ryan Smith. In each episode Ryan provides valuable information and best practices regarding the SBA loan program.
Each episode is approximately one minute in length and addresses topics related specifically to SBA 7(a) and 504 loan programs to purchase real estate, acquire a business or franchise and obtain working capital.
You’re encouraged to listen and subscribe to ensure you’re notified each time a new episode is available. Ryan publishes a new episode weekly on Tuesday mornings, unless he’s kidnapped to a deserted island of course.