If the cash to close is what is killing your commercial deal, here is the structure I use more than any other: a 70% first lien loan with the seller carrying a 20% second note behind it. You put 10% down. The seller finances 20%. The first lien lender funds the other 70%. No SBA application, no full doc gauntlet.
It is my sweet spot for a reason. The processing is much easier than an SBA or full doc loan, and it solves the exact problem most investors walk in with: “I found the property, I am just short on cash to close.”
How the numbers work
Take a $500,000 purchase:
- $350,000 (70%), first lien commercial loan
- $100,000 (20%), seller-carried second note, paid to the seller monthly
- $50,000 (10%), your cash down
The seller walks away from closing with 80% in hand and a 20% note paying them every month. You get into the property for 10% down instead of 25 to 30%.
Why sellers agree to carry
Not every seller will, but more will than you would think. A seller carrying a second gets their asking price, often a better price since they are helping make the deal work, plus monthly payments with interest instead of a lump sum they would have to figure out what to do with. It works best when the seller owns the property free and clear or owes very little on it.
This is a yes or no question, not a war. Ask it early, before you are deep into the deal: “Would you consider carrying a 20% second?”
Why this beats SBA for most investors
SBA loans have their place, and I do them. But they come with the full package: business tax returns, personal financials, a long application queue, and timing you do not control. The 70/20 structure runs on a private commercial first lien with lighter documentation, which is exactly why investors pick it when timing matters and the deal needs to move.
What this works for
I structure this for commercial and investment property, including the niche property types most lenders run from. If you have a scenario with real numbers and a seller who might carry, it is worth a conversation.
The bottom line
You do not need 30% down to buy commercial property. You need the right structure and a seller willing to carry a piece. Ask the question on every deal. The worst they say is no.
Got a commercial deal where the cash to close is the problem? Call or text me at (817) 862-6922, or reach me at lawtonbuildingandloan.com. Tell me the purchase price and whether the seller might carry, and I will tell you straight whether the structure fits.
Joel Lawton, NMLS #380245, Lawton Building and Loan
FAQs
Does the seller get paid at closing?
Mostly, yes. The seller receives your 10% down plus the 70% first lien funding at closing, 80% total. The remaining 20% is a promissory note from you to the seller, paid monthly with interest.
What if the seller will not carry a second?
Then the structure does not work on that deal, and you move on. Some sellers will, some will not. That is why you ask early instead of finding out at the eleventh hour.
Is this only for commercial property?
This structure is built for commercial and investment deals. Owner-occupied residential plays by different rules. If that is your situation, call me and I will point you the right direction.
Do you also do SBA loans?
Yes, when SBA is the right fit. But when speed and simplicity matter more than squeezing the last drop of leverage, the 70/20 structure usually wins.
How do I bring this up with the seller?
One sentence, early in the conversation: “Would you consider carrying a 20% second to help get this closed?” If they hesitate, the monthly income angle usually gets their attention.
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