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After Cardboard Castle’s first two years of operation, co-owner Alicia Johnson realized that the company was going to need more space.

The motion production studio was growing quickly. Advertising business was coming in from big-name companies like Microsoft, Nike and the Food Network, and the staff had grown from two people – Johnson and her husband, Cooper Johnson – to six. Suddenly, the company’s 1,700-square-foot space in the Olympic Mills Commerce Center felt a bit tight.

It never dawned on Alicia Johnson that Cardboard Castle could buy its own building.

“I had no idea, and I don’t think a lot of business owners know,” she said. “What we found is that pretty much for what we were paying to sublease, we could get our own space.”

It’s a story that professionals say applies to many businesses in Cardboard Castle’s shoes. The moral? Financing to purchase commercial property is available, and it’s affordable.

Cardboard Castle recently purchased a 2,600-square-foot building at 4703-4707 N. Albina Ave. for $650,000. It was built in 1929, but Portland company Reworks had already upgraded the exterior so that the building could be sold to a small business. Cardboard Castle is adding 500 square feet with an interior renovation now under way.

Charlie Boos, a vice president and business banking officer for U.S. Bank, said many businesses could pursue a similar building purchase, if they were aware of their options.

“(Alicia and Cooper), along with probably 50 percent of all the business owners out there, really don’t know what they can really qualify for,” Boos said. “Most of them are absolutely shocked, and say, ‘I could afford a building like that?’ ”

Not all business owners can become building owners; cash flow and good credit still are prerequisites. However, Boos said financial assistance is available.

For instance, the Johnsons capitalized on a Small Business Administration loan program, via U.S. Bank, that makes money available for owner-occupied commercial purchases. It requires at least 10 percent down (the industry standard is 20 percent), and comes with an approximate mortgage rate of 4.5 percent for the first five years of the 25-year term.

The SBA loan is not available to nonprofits, and the 10 percent down must be cash in hand. But reducing the down payment opened up a whole new class of buildings to the Johnsons that they could not have afforded otherwise, Boos said.

That’s good timing considering that office rental rates are slowly creeping up as vacancy declines. According to Colliers, the average asking rate for all building classes in the Portland market increased 8 cents per square foot during the fourth quarter of 2012, and 16 cents over the past 12 months, to $19.87. Class B and C offices in the central business district range between $21.15 and $18.66 per square foot, respectively; those on the east side range between $16.82 and $11.88.

Currently, Cardboard Castle pays $2,800 in monthly rent for its 1,700-square-foot space. Alicia Johnson said the company will pay $500 less per month for its mortgage than it would have paid in rent for the same amount of space at the Olympic Mills Commerce Center.

Boos added that businesses can gain non-SBA loans for occupied property purchases for rates as low as 3.5 percent. He expects rates to stay there for the next two years.

“The rates have gone down, the values have gone down, and if you can jump into a building at a lower price and at a lower interest rate, you kind of have the best of both worlds,” he said.

In Cardboard Castle’s case, the cost of the renovation was rolled into the loan used to buy the building. U.S. Bank manages distributions to the builder as the project takes place.

Reworks is handling the renovation, and intends to invest proceeds from the building sale and construction into a project next door. Aaron Blake, who co-founded the company with his wife, Christina Davis, said a new, three-story, 10,000-square-foot building will be constructed, as well as a courtyard area between the two buildings. The plan is to lease that building rather than sell it; Blake is seeking tenants.

Boos said another advantage to buying a building rather than renting is that payments are made with pretax dollars. Building equity doesn’t hurt either.

When it’s all said and done, Cardboard Castle’s new space is going to be an open, creative space with exposed wood beams and 20-foot ceilings. A central staircase will lead to a mezzanine level featuring a new editing bay, a sound booth and a server room.

Johnson said it’s a big coup for the business.

“I hope it inspires other businesses to look into the same type of situation,” she said. “When I pencil it out (it made sense), especially with other renovations that you couldn’t take with you if you had to move out.”

Boos encouraged business owners to talk with bankers, and said he would be happy to speak with anyone that would like to learn more about their options.