Commercial Real Estate & Equipment Financing in Anaheim

Running a small business in Anaheim, California, can be exciting and challenging. The city attracts over 25 million visitors each year, with major hubs such as the Anaheim Convention Center. But developing those opportunities often requires investing in expensive assets. Commercial real estate financing and equipment financing are two primary tools that help Anaheim entrepreneurs acquire property and equipment without having to pay the full cost upfront. Today, we’ll explain how these options work.

Commercial Real Estate Financing

CRE financing refers to loans used to purchase, improve, or refinance properties for business purposes. It could mean buying an office building, a retail shop space, a warehouse in an industrial area, or even a hotel. A commercial real estate loan is made to a business (or an investor) and is secured by the commercial property itself. Lenders consider the property’s value and the borrower’s financial strength when approving these loans.

Most CRE loans have shorter terms and higher requirements than home mortgages. A commercial loan often has a term of about 5 to 20 years and requires larger down payments, such as 20% to 30%. They also require that the property will be owner-occupied; for SBA-backed loans, your business usually must occupy at least 51% of an existing real estate.

Lenders will closely examine the property and your business’s finances. Two important metrics are the loan-to-value (LTV) ratio and the debt-service coverage ratio (DSCR). The LTV is the loan amount divided by the property’s appraised value – an LTV of 70-80% is typically the limit for many banks. The DSCR measures how comfortably your business can cover the loan payments. Many lenders require a net operating income of at least 1.20 to 1.25 times the annual loan payments.

Benefits of Buying Commercial Property for Your Business

Owning commercial real estate has a few benefits for your business:

Building wealth. When you pay rent, that money is gone. But when you pay a mortgage on a property your business occupies, you’re investing in an asset. Over time, you build equity in the property.
Stable control. Owning your location means you’re not subject to landlords raising the rent or selling the building. You have more control over your occupancy costs. And because you own the space, you can renovate or expand it as needed.
Rental income. If your business doesn’t need the entire building, you can lease out extra space to other tenants for additional income. So, your property can become an extra revenue stream.
Tax benefits. Commercial property ownership has tax perks. The interest portion of your mortgage payments is tax-deductible as a business expense. Later, those interest deductions can save a lot of money.

Common Financing Options for Commercial Real Estate

The most common options for purchasing commercial real estate are:

1. Bank and credit union loans. Traditional local lenders offer commercial mortgages to qualified businesses. These loans offer competitive interest rates, but also have stricter requirements. You will often need a down payment of around 20-30% of the property’s price, a solid credit score of 680 or higher, and a profitable track record in your business. The loan terms might be 5, 10, or 15 years, and many have an amortization period longer than the term.

2. SBA 504 loans. The U.S. Small Business Administration’s 504 loan program is a popular choice for financing commercial real estate in Anaheim with a smaller down payment and long-term fixed rates. An SBA 504 loan is a partnership between three parties: the borrower, a bank, and a Certified Development Company (CDC). You, the borrower, put 10% down, a bank lends 50% of the project cost, and the CDC, backed by the SBA, lends the remaining 40%. There is no balloon payment, so if you keep up with payments, you’ll own the property free and clear at the end.

3. SBA 7(a) loans. Another SBA program is more general but very flexible; it can also be used for purchasing commercial real estate, as well as working capital. Many local entrepreneurs consider 7(a) loans as an alternative to 504s or bank loans. An SBA 7(a) loan can finance a larger portion of the purchase than many conventional loans. Terms for real estate under 7(a) can go up to 25 years, similar to a mortgage. Many SBA 7(a) loans in 2025 carry interest around 7%–9%.

4. Bridge loans & others. Sometimes, a business might not qualify for bank or SBA loans, or might need funding faster. Alternative lenders can help. One example is a bridge loan or hard money loan, provided by private lenders or investors. Bridge loans are short-term loans designed to “bridge” a time gap – for instance, if you need to purchase a property in Anaheim quickly but will refinance later. They usually have higher interest rates and shorter terms (1 to 3 years). One more option is to negotiate seller financing if you’re buying the property from someone willing to accept payments over time. It is suitable for private sales, but not every seller is open to this approach.

Equipment Financing for Anaheim Businesses

Every small business needs equipment, from computers and office furniture to vehicles, machinery, or specialized tools. It matters for operating efficiently. However, new equipment can be pricey and put a strain on your cash flow. Equipment financing is obtaining a loan or lease specifically to purchase business equipment. It serves as collateral for the financing, allowing you to acquire the asset now and pay for it over time.

There are two primary ways of financing: equipment loans and equipment leases. In the first method, the lender provides a lump sum to purchase the equipment, and you repay the loan (with interest) in installments. You own it from day one, although the lender places a lien on it until the loan is fully paid. Loan terms range from approximately 1 to 5 years, but can be extended longer for very expensive equipment. The loan amount can often cover 80% to 100% of the cost so that you may need a small down payment in some cases.

In an equipment lease, you don’t initially own the equipment; you rent it from a leasing company for a set period. It often requires little or no down payment, and monthly payments can be lower than a loan because you’re paying for the usage, not the full purchase. At the end, businesses typically have options to purchase the equipment at its remaining value, extend the lease, or return it and upgrade to something newer.

Just as with real estate, SBA programs can also help with equipment purchases. If you obtain an SBA 7(a) loan, you could buy equipment and pay it off over up to 10 years. SBA 504 loans are another option and can be used to buy heavy machinery or expensive equipment with only 10% down. Many manufacturing companies in Anaheim use SBA 504 financing to acquire big-ticket machines. By using SBA loans, business owners often get lower interest rates and longer repayment terms.

Benefits of Financing Equipment (Versus Paying Cash)

Using financing or leasing to acquire equipment is valuable for several reasons:

Working capital. By financing, you avoid a large one-time payout and instead spread the cost of equipment over months or years. This keeps your cash free for other needs. The equipment can start generating income immediately (serving customers), and the business retains cash for daily expenses.
Tax deductions. Financing equipment also has tax benefits. U.S. tax law (IRS Section 179) lets businesses deduct the full purchase price of qualifying equipment in the year it’s purchased, even if it’s financed. Lease payments can also often be written off. Always check the latest rules.
Latest technologies. Using financing or leasing helps businesses stay up-to-date. You can afford to buy outright, but financing lets you acquire cutting-edge tools now and pay later. It can improve efficiency, product quality, and customer service.
Maintenance and reliability. Financing lets you bring in warrantied, reliable equipment that is much less prone to breakdowns, so you spend less time and money on repairs. Many leases even fold routine maintenance into the deal, meaning the lessor handles the service work for you.

Qualifying for an Equipment Loan or Lease

Obtaining equipment financing is easier than getting a large commercial real estate loan, but lenders still have criteria you’ll need to meet:

Credit score and history. Lenders will check your personal and business credit profile. A solid personal credit score (generally 600 or higher, and especially 700+ for the best terms) improves your chances for financing. Don’t worry if your business is young; equipment lenders will rely on the owner’s credit in that case. Before applying, review your credit reports and resolve any errors.

Time in business and revenue. Many lenders prefer that a business has been operating for at least one to two years before extending an equipment loan. An established revenue history gives them confidence that you can handle the monthly payments. A rule is that the equipment should ideally either increase your revenue or efficiency enough to cover its cost, or you have sufficient existing income to cover the payment.

Collateral value. The equipment being purchased is the collateral. Lenders will evaluate the type of equipment and its expected resale value. If you are buying a widely used item, the lender knows it can be resold easily if you default. If the equipment is very specialized, the lender may be more cautious. Be prepared to provide a quote or invoice from the vendor that details the equipment and its cost.

Financial documents. You will need to submit documentation. Requirements include business bank statements for the last 3–6 months, recent tax returns for 2 years, and basic financial statements. To avoid delays, have your paperwork organized. If your business is relatively new, you may also want to include a brief business plan or summary.

Down payment & advance rentals. Depending on the lender and your qualifications, you may not need any down payment for an equipment loan. Some finance 100% of the cost. Others might require 10% down or the first and last month’s lease payments upfront in the case of a lease. Being willing and able to put some money down can lower your monthly payment.

Tips for Securing the Financing You Need

The loan process can feel overwhelming, but a few steps can make it smoother:

Compare Offers

Different lenders offer varying terms, so check with a local bank or credit union, as well as at least one specialized online lender or broker. Compare APRs and fees. Also, look at whether rates are fixed or variable, and if there are any prepayment penalties. Don’t hesitate to ask the lender to clarify any costs or terms you don’t understand.

Communicate Well

Once you apply, be responsive to your lender’s requests. If an underwriter asks for an additional document or clarification, respond quickly. Prompt communication can move your application along faster. Especially with programs that involve multiple parties, there can be extra steps, so being quick to reply will keep things on track.

Mind Your Credit

Avoid making big changes that could alarm your lender while your loan is under review. Do not take on a new large debt, suddenly max out business credit cards, or let any existing leases lapse. Lenders often do a final review before closing, so keep your financial picture stable and similar to what you presented.

Plan The Future

Plan for how you will manage the loan. Create a budget that includes the new monthly payment and stress-test it. It’s better to take a slightly smaller loan or lease slightly cheaper equipment than to over-extend and struggle with payments later. Also, make sure it’s insured against damage. Borrow responsibly and strategically.

Combining Real Estate and Equipment Financing for Expansion

A notable scenario worth mentioning is when a business is expanding and needs to invest in real estate and equipment simultaneously. How can a business handle financing both? A couple of approaches are:

SBA 504 Loan for a Total Project

The SBA 504 is designed for this type of situation. It can finance major fixed assets, which include real estate, land improvements, and heavy equipment. If you’re buying a building for $800,000 and need $200,000 in machinery, a 504 loan could be structured to finance $1 million. This way, you deal with a single loan package and one closing. Keep in mind the occupancy rule (the project must be majority owner-occupied) and that 504 cannot finance items such as inventory or working capital. But as long as it’s tied to real estate and equipment, you’re covered.

SBA 7(a) Loan for Mixed Uses

If the total funding needed is within the $5 million SBA 7(a) limit, this loan could be a one-stop solution as well. The 7(a) program is very flexible so that you could roll real estate, equipment, and startup costs all together. You’d still likely need around 10% (maybe up to 15%) equity injection, similar to a down payment, but not a full 20-30%. The loan would probably have a 25-year term if it includes real estate, making payments more manageable. However, if your expansion needs exceed $5 million or have certain complexities, you might even combine loans. Banks can sometimes do a piggyback structure. However, many small businesses find that a single 7(a) loan covers everything when the project isn’t too large.

Separate Loans or Leasing

You can also obtain separate financing for real estate and equipment. You may obtain a conventional bank mortgage or an SBA 504 loan for the property, and then utilize a specialized equipment lender or lease for the equipment. Then, each loan is tailored: the real estate loan could be a 20-year fixed, and the equipment lease might be 5 years with an upgrade option. It provides you with more flexibility in choosing the best deal in each category. The challenge is managing two debt obligations and going through two approval processes.

Final Thought

Commercial real estate financing and equipment financing are powerful tools that enable small businesses in Anaheim to grow, innovate, and build for the future. With them, an entrepreneur can secure a prime location or acquire good equipment and pay for it over time. Instead of waiting years to save enough capital, businesses can act quickly and become successful!