Special purpose property

Definition

A building made for one use, which the SBA finances on its own terms.

Why It Matters

The SBA keeps a list of them, among them car washes, funeral homes with crematoriums, gas stations, marinas, golf courses, hotels and nursing homes. Since October 2026 a purchase that includes one the business occupies can be financed differently from any other acquisition. Where the appraised real estate fully secures the loan, the lender may meet the coverage floor on two years of projections, reached within two years of funding, instead of on the last fiscal year. The term can run to 25 years where real estate is 85% or more of the project, and no quality of earnings report is required at any price.

In numbers: A $4.5M self-storage purchase whose appraisal fully secures the loan may show its 1.25x coverage on projections within two years of funding, and needs no quality of earnings report despite a price above $3 million.