At some point, most business owners ask the same question: should we keep renting, or is it time to buy?
It is not a simple yes or no. The right answer depends on your business’s financial position, growth trajectory, and long-term goals. But for a lot of established small businesses in Utah and Idaho, the math tips further toward buying than most owners realize — especially when SBA 504 financing is part of the picture.
Here is a straightforward look at both sides of the decision.
The Case for Renting
Renting makes sense in specific situations, and it is worth being honest about when those situations apply.
You need flexibility. If your space requirements are likely to change significantly in the next few years — because you are growing quickly, scaling down, or still figuring out your long-term model — a lease gives you options that ownership does not.
Your capital is better deployed elsewhere. For some businesses, the cash that would go toward a down payment generates a higher return when it stays in operations, inventory, or growth initiatives. This is especially true in early-stage businesses where capital allocation directly affects survival.
Your market is uncertain. If the local commercial real estate market is volatile or you are in a sector going through significant disruption, locking into ownership carries more risk than a lease.
You are not yet established. Lenders, including SBA programs, generally want to see a track record. Businesses less than two years old face higher down payment requirements and more scrutiny in underwriting.
These are real reasons to rent. But for businesses that have moved past these stages, the calculus often shifts.
The Case for Owning
Your mortgage payment replaces your rent payment. This is the core of the argument. Every rent payment is money that leaves your business permanently. Every mortgage payment builds equity in an asset you own. Over a 20 or 25-year horizon, that difference is substantial.
You lock in your occupancy cost. A 25-year fixed-rate SBA 504 loan means your principal and interest payment is the same in year 25 as it is in year one. Commercial leases, by contrast, typically include annual rent escalations of 2 to 4 percent. Over time, the gap between a fixed mortgage and an escalating lease widens considerably.
You control your space. Owners do not face lease non-renewals, landlord-initiated renovations, or restrictions on how they use and modify their space. For businesses that have invested heavily in buildout, equipment, or infrastructure, losing a lease can be genuinely damaging.
Commercial real estate appreciates. Your building is likely to be worth more in 10 or 20 years than it is today. That appreciation belongs to you as the owner, not your landlord.
Tax advantages. Owners can depreciate their commercial property, deduct mortgage interest, and in some cases write off eligible improvement costs. These deductions reduce taxable income in ways that rent payments cannot.
Running the Numbers: A Simple Comparison
Here is a simplified example using realistic numbers for a Utah commercial property.
Assume a business is currently renting 5,000 square feet at $18 per square foot annually, or $7,500 per month. The lease includes 3 percent annual escalations.
A comparable property available for purchase is priced at $1.5 million. With SBA 504 financing at 10 percent down, the business puts $150,000 down. At current 504 rates on a 25-year term, the monthly payment on the SBA portion and bank portion combined comes in around $8,200 to $8,800 per month depending on the rate environment.
That monthly payment is higher than the current rent — but it is fixed for 25 years. The lease payment, with 3 percent annual escalations, reaches $8,600 per month by year 6, crosses $10,000 per month by year 11, and exceeds $13,000 per month by year 20. Over 25 years, the cumulative difference between a fixed mortgage and an escalating lease runs into hundreds of thousands of dollars — before factoring in equity, appreciation, or the value of owning a paid-off building at the end of the term.
How the SBA 504 Program Changes the Math
The reason ownership becomes accessible for so many small businesses is the 504 loan’s structure. A conventional commercial mortgage typically requires 20 to 25 percent down. On a $1.5 million property, that is $300,000 to $375,000 out of pocket.
The SBA 504 program brings the down payment to 10 percent, or $150,000 on that same property. That difference — $150,000 to $225,000 in preserved capital — is often what makes ownership realistic for a business that could not otherwise absorb the conventional down payment requirement.
Add in the fixed rate for up to 25 years, and the 504 program makes ownership not just accessible but financially competitive with renting in a way that conventional financing often does not.
Questions to Ask Before You Decide
If you are weighing the decision, here are the questions worth working through:
How long do you plan to stay? Ownership makes more sense the longer your time horizon. If you are planning to be in the same location for 7 or more years, the financial case for buying strengthens considerably.
Is your business cash flow stable? Lenders will look at your ability to service the debt. If your revenue is consistent and your margins are healthy, you are in a good position to qualify.
Do you have the down payment available? With 504 financing, that number is lower than most owners expect — but it still needs to be there.
Is the property the right fit long-term? Buying a building you will outgrow in three years is not a good outcome. Make sure the space fits your 10 to 15-year operational vision, not just your current footprint.
What does your accountant say? The tax implications of ownership are significant and worth a conversation with your CPA before you decide.
The Next Step
If you are leaning toward ownership and want to understand what 504 financing would look like for your specific situation, the best starting point is a conversation with a CDC. There is no cost to find out whether you qualify, and the numbers are often more favorable than business owners expect.
InterMountain Business Lending works with Utah and Idaho business owners through exactly this decision. We can walk you through your eligibility, run the financing numbers, and give you a clear picture of what ownership would actually cost compared to your current rent.
Talk to IMBL about purchasing your commercial space →
InterMountain Business Lending is a Certified Development Company (CDC) serving small businesses in Utah and Idaho since 1979. We specialize in SBA 504 financing for commercial real estate, construction, equipment, and refinancing.