Question 1

Does it make sense to buy instead of lease in San Jose right now?

Accepted Answer

It's worth running the numbers, and the comparison isn't as one-sided as the sticker price suggests. Silicon Valley overall office asking rent was $5.22 per square foot per month, full service, in the second quarter of 2026, up from the first quarter. A lease at that rate carries no equity and no rate certainty at renewal. Buying carries its own San Jose-specific cost: the city taxes commercial landlords a base fee plus $0.0316 per square foot a year, so if you occupy less than the whole building and lease out the rest, you pick up a landlord's tax bill on top of the mortgage. Run both sides of the ledger for your actual space need before assuming ownership wins.

Question 2

How much of a San Jose building do I have to occupy to qualify for SBA financing?

Accepted Answer

At least 51% of the building if you're buying an existing property. For new construction the bar is higher: you must occupy at least 60% at completion, and no more than 20% of the space may ever be permanently leased to another tenant, with a formal plan to absorb the remainder within 3 to 10 years (13 CFR 120.131). In a market where office space is scarce and expensive, it's tempting to buy bigger and lease the rest to offset the payment. That plan has a hard ceiling under federal rules, so size the purchase to your own business first.

Question 3

If I buy a San Jose building through SBA financing, what does the city charge me if I build out tenant space afterward?

Accepted Answer

San Jose's remodel-tax rule taxes the bid cost of the buildout, not a discounted valuation, so tenant improvements after an SBA purchase can carry a real construction excise bill. The city's Building and Structure Construction Tax on an alteration, remodel, or repair is calculated on 20% of the standard ICC valuation or the actual construction bid cost, whichever is higher (SJMC 4.46.050). On a $250,000 tenant-improvement bid, that alone runs about $3,850, and San Jose's second construction tax may add to it. Build that into the total project cost when you're comparing an SBA purchase-plus-buildout against staying in a leased space, not just the acquisition price.

Question 4

Is there a minimum SBA loan size for a San Jose purchase?

Accepted Answer

We place SBA deals from $350,000 up to $5,000,000 and beyond. The floor rarely binds in San Jose. Owner-occupied commercial real estate in the most expensive commercial market in the country prices well past $350,000, so the practical question is the top of the range and how the partner lender structures a larger deal across 7(a) and 504. Terms run up to 25 years at market SBA rates, set by that lender. Subject to underwriting.

Question 5

What cash do I need beyond the down payment on a San Jose SBA purchase?

Accepted Answer

Plan on about 10% down, plus the buildout. SBA financing covers up to 90% of the deal, so on a $2,500,000 San Jose building that is up to $2,250,000 financed and $250,000 from you (2,500,000 x 90% = 2,250,000). The line owners miss is what happens after close: San Jose taxes an alteration or remodel on the construction bid cost or 20% of the city's own valuation, whichever is higher, so a tenant-improvement buildout carries city construction excise tax on the full bid, with a second city tax possibly on top. Budget the buildout with the purchase. Subject to underwriting.

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