Commercial Development Investment Structure

2 Replies

I run a youth soccer business and we are in the process of purchasing a commercial property which we would like to convert into a soccer facility. Currently we are a little short on the equity for the deal and we likely need to raise and extra $50k-$60k to cover the equity for the $1.5 deal. If we move forwards we will set up a separate LLC which will be the real estate side of our business and continue our current operations as usual. I am trying to figure out the best way to structure a deal like this and I would like to keep our regular business and the real estate side of our business separate in the deal. To qualify for the SBA loan we are hoping to obtain the equity must be a regular investment in the business and not an equity loan.

Any advice on how to bring in potential investors for a deal like this would be much appreciated.

You're on the right track with separate LL and operating business/tenant entities. I do not think that works for the SBA however. You would bring investors in via equity ownership of the borrower LLC. They get a full right to profit, but can delineate management decisions, etc.

Thank you for the feedback on this. That is fine but I would like an option to buy them out at some point in the future. Any suggestions on how this could be structured so that it is worthwhile for both parties. Also, any suggestions on how I would calculate what percentage of the business and amount of profit to offer based on the investment.