Are you considering purchasing an RV park but don't have the cash to do so? Have you heard of the SBA 7a loan? In this blog post, we will discuss how the SBA 7a loan can help you finance your RV park purchase.
The SBA 7a loan is an excellent financing option for RV parks, even if they require value-added upgrades. As explained by Bo Eckstein, host of the Investor Financing Podcast, the loan is a projection-based loan that allows you to take a two-year pro forma of what you plan to do with the property. This means that even if the property has low occupancy rates and rent, you can still qualify for the loan if you have a solid plan to improve the property and increase income.
The Benefits of the SBA 7a Loan
One of the benefits of the SBA 7a loan is that it offers high leverage, meaning you can borrow more money than with other types of loans. Additionally, the loan has lower down payment requirements than conventional loans, which can help you get into the RV park business with less cash upfront.
Another benefit of the SBA 7a loan is that it has a lower interest rate than many other financing options, making it an affordable choice for long-term financing. Plus, the loan term can be extended up to 25 years, which can help you manage your cash flow and make your monthly payments more manageable.
Consider Bridge Financing
If the RV park you're interested in needs significant upgrades and has low occupancy rates, you might want to consider bridge financing. Bridge financing is a short-term loan that is based on the value of the asset rather than your credit score or income. You can use this type of loan to purchase the RV park, make the necessary improvements, and then refinance into an SBA 7a loan or conventional loan.
Bridge financing can be an excellent option if you need to act quickly to secure a property but don't have the cash or credit score to qualify for a conventional loan. However, be aware that bridge financing typically comes with higher interest rates and fees than other types of loans.
Conclusion
If you're considering purchasing an RV park but don't have the cash upfront, the SBA 7a loan could be an excellent financing option for you. With its high leverage, lower down payment requirements, and low-interest rates, the loan can help you get into the RV park business and start generating income. Additionally, if the RV park needs significant upgrades and has low occupancy rates, bridge financing can be a great option to help you secure the property and make the necessary improvements.
Remember to always consult with a financial advisor or loan specialist before making any big decisions regarding financing. Good luck with your RV park purchase!