Question 1

At San Francisco price levels, does buying instead of leasing actually work under the SBA's occupancy rule?

Accepted Answer

Yes, and the rule doesn't bend for a high-cost market. Under 13 CFR 120.131, an existing building needs your business in at least 51% of the rentable space; new construction is stricter, with a 60% owner-occupancy floor, only 20% permanently leasable to a third party, and an absorption plan for the rest. That is the same test whether the building sits in the Mission or in Concord. What changes in San Francisco is the payoff for clearing it: citywide all-types rents rose 23.2% in the year to July 2026, so a business that fixes its occupancy cost by owning is escaping a fast-moving number, not a flat one.

Question 2

How does Proposition 13 change the math on an SBA purchase here compared to leasing?

Accepted Answer

It caps the one cost a lease can't cap. Every California purchase resets the assessed value to the price paid, and after that the assessed base can rise at most 2% a year regardless of how much market rents or values move, under Cal. Const. article XIII A. A San Francisco business that owns its building locks its property-tax basis to that 2% ceiling while a lease renews against the market, and this metro's rents have been moving well past 2% a year. That is a real, sourced argument for a 504 purchase in this city; it is not a claim about your specific tax bill; talk to your CPA about how it applies to your entity.

Question 3

Is a 504 loan really just 10% down for a San Francisco building?

Accepted Answer

Ten percent is the floor, not the rule, and San Francisco's basis makes the floor matter more. Under 13 CFR 120.910, a borrower puts in 10% on an ordinary project, 15% if the business has operated less than two years or the building is single-purpose, and 20% if both apply. That 5 or 10 point swing is a real dollar gap to plan for before you go under contract. If the approval is going to take a while and the seller won't wait, a bridge loan can get you to closing while the SBA file works through underwriting.

Question 4

Which SBA district office covers a San Francisco or East Bay purchase?

Accepted Answer

All five counties in this metro go through one office. The SBA San Francisco District Office, at 455 Market St., Suite 600, San Francisco, covers 14 northern California counties, including all five that make up this metro: San Francisco, Alameda, Contra Costa, Marin and San Mateo. A borrower buying in Oakland, Concord or San Rafael files through the same district as one buying on Market Street, which keeps the process consistent no matter which of the eight cities we serve here the deal is in.

Question 5

I own a small business and want to buy my own suite instead of leasing. Is a condo purchase an SBA option here?

Accepted Answer

Commercial condominium conversion is a live, separately listed process in San Francisco, unlike the residential side. San Francisco Public Works runs a Commercial Condominium Conversion application through its Subdivisions and Mapping section with no unit limit stated on the page, distinct from the residential program, which is capped at two units with its expedited multi-unit path currently marked suspended. That gives an owner-user, or a sponsor carving a building into sellable commercial suites, a path the residential investor doesn't have. Confirm current eligibility with Public Works before you underwrite a deal around it, and talk to your attorney about the filing. Once the suites are sold or leased and stabilized, see San Francisco CRE permanent options for the remaining inventory.

Question 6

Is there a minimum loan size for an SBA loan in San Francisco?

Accepted Answer

Yes. We place SBA loans from $350,000 to $5,000,000 and up. In this metro the floor is easy to clear and the top end is the part worth planning: at financing up to 90% of the purchase, a $5,000,000 loan sits against a roughly $5,550,000 building (5,000,000 divided by 0.90 = 5,555,555). A small suite in Oakland or Concord and a Market Street floor are both in range, and both file through the same SBA San Francisco District Office. Subject to underwriting.

Question 7

How long can I amortize an SBA loan on a San Francisco building?

Accepted Answer

Up to 25 years, at market SBA rates. A long amortization is what makes an owner-occupied purchase compete with a lease at this metro's price levels, because it spreads a high basis over a long horizon instead of asking the business to carry it in a few years. Pair that with Proposition 13, which caps the assessed base at 2% a year after the purchase resets it, and the two largest occupancy costs are both fixed on schedules a lease renewal is not. Talk to your CPA about how it applies to your entity. Subject to underwriting.

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