Self-storage business loans and financing options from the SBA

The $39.5 billion self-storage market is growing rapidly with the United States driving its expansion. 9.5 percent of American households rented self-storage units in 2015. Currently, there are 49,000+ self-storage facilities in the United States and this number will continue to rise. As residential real estate values continue to climb and price new homebuyers out of the market and force them into becoming renters, the self-storage industry will continue to grow over the foreseeable future.

With such a prognosis, it is no surprise that self-storage companies and ambitious business owners are looking to launch or grow their operations by investing in additional real estate and buildings to satisfy the demand. for storage units.

The market appears to be moving in the right direction, luring more self-storage companies to join the expansion trend.

Why is it important to secure financing for your self-storage company?

There are several ways for self-storage companies to expand and grow. Some companies might want to purchase a building that they are presently renting. Others might refinance or invest in new technologies to advance their company. Businesses that wait until they have the cash available to pay upfront frequently miss out on investment possibilities that are time sensitive. However, obtaining the appropriate financing can help self-storage firms quickly obtain the funds they require.

The following are questions a budding self-storage owner may ask to help determine the type of financing they may need:

• What additional growth prospects might aid your company in achieving its objectives?
• Where will any extra money be spent?
• What impact will your project have on your company over the coming years?
• How has your credit score changed over the last few years as a result of your business practices?
• Have you spoken with a reputable commercial mortgage adviser who has experience working with self-storage companies about all your financing options?

No matter the size of the firm or its past or specific needs, financing choices are available. Additionally, while certain loans may quickly fund initiatives, they frequently end up consuming more of your well-earned revenues in the long run. For your project to continue going forward, it is essential that you take the time to obtain a loan that enables you to retain more capital over the long run. To identify the loan that is the best fit for your company, a commercial mortgage adviser can assist you in considering all of your possibilities.

Various Self-Storage Financing Options

Every self-storage company is different, with unique growth objectives, credit histories, and financial profiles.

Two of the most popular forms of financing for self-storage businesses are conventional loans and SBA loans.

Conventional loans offered by banks and other lending institutions are generally the most flexible. However, approval rates are fairly low compared to SBA loans, interest rates can be significantly higher, and down payments (i.e., equity) can be a lot higher.

The SBA 7(a) loan is the most often used SBA financing instrument for self-storage business owners. You can also get an SBA 504 loan for self-storage. See below for more information about the SBA 504 loan program.

Businesses may obtain up to $5 million to fund the following initiatives or objectives: acquiring new property or construction of self-storage units.

Why pick a 7(a) loan from the SBA?

Because the SBA allows owners to borrow for a longer period of time with a lower down payment, SBA 7(a) loans are popular among qualifying self-storage companies.

Loans from SBA 504 for self-storage companies

For companies looking to invest in real estate or equipment for their long-term expansion, SBA 504 loans are another choice. These loans are also referred to as CDC loans, or Certified Development Company loans. A business may use an SBA 504 loan for:

• acquiring leased or existing properties or structures
• Investing in new technology or equipment to grow your self-storage company
• Buying new structures or remodeling existing ones

Traditional financing for self-storage companies

The option to obtain a conventional loan is available to self storage companies wishing to purchase or refinance commercial real estate. Owner-occupied multi-use properties are eligible for conventional financing.

Small Business Loans for Self-Storage Companies

The United States Small Business Association (SBA) was established in 1953 to provide small firms with services that support sustainable growth, including loans that are guaranteed. Millions of projects have been sponsored by the SBA since it was established, and in 2014 alone, it granted more than $19 billion in 7(a) loans.

Banks and lenders can be confident that their loan will be protected because the federal government guarantees SBA loans. SBA loans come with affordable rates that lenders can help repay over a longer period of time. Loans from the United States Department of Agriculture (USDA) are accessible to rural enterprises in need of funding.

Why should self-storage companies to use SBA financing? Self-storage companies that meet the SBA requirements can obtain loans with lower down payments and rates that are more affordable than those on conventional loans. With an SBA loan, businesses can defer repayment for a long time and (7(a) only) set aside extra funds for future expansion and investments.

Guaranteed loans come with lower interest rates and a partial guarantee that the business will be able to repay the loan.

The Loan Financing Process for Businesses in Self Storage

Get in touch with a commercial mortgage adviser you can rely on when you're prepared to move forward and discover whether a conventional or SBA loan is the best option for you.