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Study: Commercial real estate an opportunity for small biz

A new study, “CIT Small Business Commercial Real Estate Study,” indicates that buying commercial real estate can be an opportunity for small business owners. However, although prices are low, only 6% have purchased one or more properties over the past two years, while a majority (52%) hasn’t thought about making an acquisition, and only a little over a quarter (28%) believe that buying real estate today presents a “great” or “substantial” opportunity.

The survey included more than 300 small business owners around the United States. The study was developed by CIT Group Inc., a provider of financing to small businesses and middle market companies, and the data collection was conducted online by Harris Interactive Service Bureau, a leading global market research firm.

Key findings from the study:

  • Economic and financial anxiety remains. Thirty-six percent of small business owners said that the biggest barrier they faced in securing a loan to buy commercial real estate was current market/economic conditions. Financial constraints also remain a significant hurdle, with nearly one in five small business owners (19%) indicating that they could not afford a down payment to secure a traditional bank loan to acquire commercial real estate.
  • Refinancing not top-of-mind. Despite interest rates at historic lows, only 13% of small business owners who owned their property were “very likely” or “somewhat likely” to consider refinancing, while nearly a quarter (24%) were “not very likely” or “not likely at all” to consider refinancing.
  • SBA loans offer options. Just under a quarter (23%) of small business owners indicated that SBA loans were a good overall choice with no significant downside and one-fifth said they were designed to help business owners with less than perfect credit. Small business owners indicated that SBA loans allowed borrowers to make a lower down payment (14%), have a lower monthly payment (12%), and pay off the loan over a longer time period (15%).
  • Few familiar with recent small business legislation. Just over half (52%) of small business owners indicated that they did not know what the Small Business Jobs and Credit Act was or how it might impact them as small business owners. The legislation sweetens SBA loan terms for both lenders and borrowers, eliminating borrowers’ fees, raising the loan guarantee to 90% from 75%, and increasing loan limits. (Note: This study was conducted between September 9 and 13, 2010, before the bill passed Congress and the President signed it into law.)

The study was conducted online in September 2010. Respondents included 306 non-home-based small business owners/decision makers from across the United States. Data for this survey were collected by Harris Interactive Service Bureau (“HISB”) on behalf of CIT Small Business Lending. HISB was responsible for the data collected and CIT Small Business Lending was responsible for the survey design, data weighting, data analysis, and reporting.


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