How to Obtain a Loan to Build on Leased Property

by Owen E. Richason IV; Updated September 26, 2017
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Small business owners and entrepreneurs seeking to build on commercial lease property may apply for a business loan to finance the building's construction. Lenders will typically want a copy of the lease agreement along with a notarized authorization from the commercial land owner stating the borrower is free to improve the property but must relinquish rights to the improvements at the end of the lease term or buy said property.

Step 1

Determine building costs. Hire an architect to design the building. Consult a commercial contractor to estimate the cost of the project.

Step 2

Write a business plan. Include the costs of construction, purchasing inventory and marketing. Provide earning and expense projections over the next five years.

Step 3

Find a commercial lender. Consult the Small Business Administration's "Financial Assistance" section on its official website. Choose an approved commercial lender from the SBA's list. Visit the lender's website to read about its loan process.

Step 4

Meet with a commercial lender and speak about building on leased property. Take a copy of the commercial land lease and a notarized building-authorization statement to the lender. Request a loan application. Review the application with your attorney or accountant, complete it and return it in person to the lender.

About the Author

Owen Richason grew up working in his family's small contracting business. He later became an outplacement consultant, then a retail business consultant. Richason is a former personal finance and business writer for "Tampa Bay Business and Financier." He now writes for various publications, websites and blogs.

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