If you're looking to purchase a campground in Northern California and wondering about the best financing options, you've come to the right place. In this blog post, we'll discuss how you can finance your campground acquisition using SBA 7a or SBA 504 loans. With a desirable location, strong cash flow, and attractive features like campsites, an RV hookup, a general store, and a laundry facility, financing your campground dream is within reach. Let's explore the options!
Understanding the Financing Landscape
When it comes to rural areas with a population of around 40,000 to 50,000 or less, your campground venture could be a good candidate for USDA or SBA loans. By using a mapping system, lenders can quickly determine if your property falls within a USDA-designated area. However, while USDA loans offer a five-year fixed rate, the SBA 7a loan provides higher leverage and the possibility of additional working capital.
Evaluating USDA and SBA Options
To determine which financing option suits your needs, various factors must be considered, including the seller's willingness to carry a small note and whether they are open to a standby arrangement where they won't receive payments for the loan term. Most lenders commonly deal with SBA 7a loans, but there are also specialized lenders who handle USDA loans. For a purchase price of $2.495 million, the loan amount falls within a range where both options could be viable.
Required Documentation for Loan Approval
To kickstart the loan application process, you'll need to gather several essential documents. These include three years of tax returns from the seller, year-to-date financial statements, a completed Form 413 (personal financial statement), a debt schedule, affiliate tax returns for any other businesses you own, and a comprehensive resume. Additionally, lenders usually request three years of projections to assess your business plans and financial feasibility.
Navigating the Loan Process
While the idea of SBA and USDA loans might seem daunting to some, the reality is that the process is relatively straightforward. It involves submitting the required documents and going through a vetting process, which typically yields a preliminary approval within 10 days. Although USDA loans require a bit more paperwork due to their 504 loan structure, both loan types can typically be closed within 60 to 75 days from start to finish.
Expert Assistance for Your Campground Acquisition
If you're feeling overwhelmed or uncertain about the financing process, don't worry. There are professionals who specialize in assisting investors with recreational property acquisitions, such as campgrounds, motels, and cabins. These experts have the knowledge and experience to guide you through the process and ensure a smooth financing experience. With their assistance, you can confidently pursue your campground acquisition goals.
Reach Out for a Free Strategy Call
If you're a real estate investor seeking to refinance or expand your existing business, consider booking a free strategy call with a seasoned professional like Beau Eckstein. With over 20 years of experience in the lending industry, Beau can provide you with valuable insights and help create a strategic finance plan tailored to your specific goals. Whether you're a seasoned investor with a large portfolio or just starting out with your first property, Beau has a framework that has helped numerous investors succeed.
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