Will the USDA Guarantee Commercial Loans Where There Are Some Residential Units on the Property?
USDA commercial loans are terrific deals, if a commercial property qualifies. Certainly motels, hotels, restaurants, office buildings, retail buildings, strip centers and industrial buildings qualify.
However, apartment buildings do NOT qualify. The purpose of a USDA commercial loan is to promote the growth of businesses and industries in rural areas. Mere rental housing is not considered a business or industry for the purposes of this program.
But what about a mixed use property, such as apartments over several storefronts? You'll find a great many mixed use buildings in the center of most older towns. Do these properties qualify for a USDA commercial loan?
I asked this question of a USDA commercial lender. Here is his response:
[There is no blanket rule. Each property would be looked at on a] case by case basis, depending on the amount of mixed use. Some state offices are more open to it than others. Generally, the residential component has to be small compared to the rest of the project. If the residential portion is more than 50% [of the total square footage or scheduled rents], it would not work.
Need a USDA commercial loan right now? Please call Tom Blackburne at 574-210-6686 or email him at firstname.lastname@example.org.