Ever wondered how the Small Business Administration classifies investment real estate? Since investment properties only qualify for the SBA 504 within certain parameters, it's important to understand the SBA's guidelines.

1. A property must be at least 51 percent owner-occupied for existing real estate and 60 percent owner-occupied for new construction for SBA to consider it eligible real estate. A single property can include multiple businesses by the same owners; however, those with at least 20 percent ownership must guarantee the loan to count toward the occupancy. Common areas often can be included as part of the occupancy.
2. As the SBA determines a business' credit worthiness, it only considers the cash flow from the business or businesses guaranteeing the loan. Rental payments from any business not guaranteeing the loan will not be considered by the SBA. However, St. Louis County Economic Council's Business Finance Division will take the additional rental income into consideration for its determination of credit worthiness. SBA additionally requires that rental payments generated must cover its obligations at a minimum one-to-one ratio.
3. Under the new SBA refinance, a business owner does not have to occupy 51 percent of the property as long as he operates at least 51 percent of the business.