How does withco define “small business?”

Stu Little
small business real estate store front sign
Published on June 8, 2022

This is how we identify which small businesses qualify for withco’s lease-to-own model. 

At withco, we measure our success based on our ability to impact the small business community. Our core mission is to help small business owners become property owners so that they can ensure their longevity and build the generational wealth that’s become more and more elusive in today’s market.

But according to the government-run Small Business Administration, there are over 30 million small businesses across the U.S. based on their definition of the term. While we’d love to help as many small businesses access the capital they need to purchase their commercial property, there is a set criteria that we operate under to ensure our partnerships result in a win-win scenario on all sides.

Below, we’ll break down just how withco defines “small business” and who actually qualifies to participate in our signature lease-to-own model.
The Small Business Administration has a very broad definition of the term "small business."

Our lease-to-own model

To understand the kind of small businesses we work with, it’s important to understand how withco’s lease-to-own model works. Essentially, withco is a real estate investor who purchases properties that are occupied by small businesses. We then lease the property to the small business owners.

In this way, we operate much like a traditional landlord, only everytime the small business pays rent to us, they earn a percentage of the downpayment they need to purchase the property from us at the end of our five-year lease term.
Our lease-to-own model is a win-win for all.

Of course, to ensure that the small business can successfully purchase the property from us at the end of the lease, the business must undergo a substantial underwriting process and meet specific criteria.

SBA mortgage eligibility

The #1 qualification we use to determine eligibility for partnership with a small business is whether or not the business would qualify for an SBA mortgage at the end of our lease term. This is because our end goal is to set our partners up with a SBA mortgage at the end of their five-year withco lease—though this isn’t the only financing option. Small business owners are able to choose the lender that works best for them.

How a beloved restaurant in Jefferson, GA, found their path to property ownership.

Eligibility for SBA loan requirements vary drastically by industry, but consider both the business’s revenue and number of employees. We will only partner with businesses, including franchisees, that are eligible for a SBA loan at the end of their lease term.

SBA guidelines stipulate that the business must:

  • Be an independent business with fewer than 500 employees, though this may vary by industry.
  • For the industry-specific requirements, see here.
  • Operate as a for-profit company in the United States or its possessions
  • Have a tangible net worth of less than $15 million
  • Have an average net income of less than $5 million after federal income taxes for the two years preceding your application
withco's mission is to make sure more small businesses can stay in their space and own their property.

Types of businesses that qualify for SBA loans

There are certain types of businesses that the SBA will not offer financing to, and unfortunately this means we won’t be able to partner with these types of businesses. Restricted industries include:

  • Marijuana
  • Firearm industry
  • For-profit prisons
  • Payday loans
  • Casinos / gambling
  • Fracking
Small business in bloom.

withco’s small business requirements

We are currently only focused on investing in properties that are occupied by a single small business tenant. Thus, the small business tenants must intend to stay in the property long term and/or have the desire to own their property.

The businesses must also be in good financial standing to successfully make future mortgage payments. This will be determined by our streamlined yet rigorous underwriting process and means that business must be able to share up-to-date financials with withco.

Franchise eligibility

withco is happy to work with franchises in certain cases. For franchisees, we use the number of locations to inform whether they qualify: We are open to partnering with owners of multiple locations, but are currently prioritizing those who own and operate fewer locations.

Interested in working with us? This is just an outline of how we define small businesses, but we’re always happy to discuss if a tenant fits our definition. We’re looking to partner with your favorite mom n’ pop shop or local franchisee. Here’s a few recent small businesses we’ve partnered with:

  • Cuco’s, a family-run Mexican restaurant in Albuquerque, NM
  • DealerMax, an auto dealership in Fern Park, FL
  • Ivy League Learning Center, a tutoring facility in Memphis, TN
  • Barley & Vine, a wine bar in Newburgh, OR
  • European Medical Massage & Spa in Shillington, PA

Want to own your business’s property or have a property that may be a fit for withco?

Let’s work together.