Self Storage Business Loans From The SBA
Self-Storage Businesses Are Now Eligible for SBA Loans
The SBA has changed the rules for "passive income" properties making Mini Storage Businesses eligible for SBA financing. This is big news for those looking to refinance, acquire or build a self or mini storage facility.
Self Storage SBA Loan Benefits:
- Longer term loans are available (up to 25 years).
- SBA Loans have lower equity and down payment requirements - as low as 10 to 20% for self storage - which is helpful for refinances, purchases and construction.
- SBA financing can be used to make improvements or to expand mini warehouse properties.
- Working capital and business debt consolidation are possible for self storage businesses.
- SBA financing can now be used to acquire or refinance multiple self storage/mini warehouse businesses since SBA eligibility is not determined by the number of loans but by the total amount of SBA eligibility used and this amount is now $5 million ($5.5 million for green or energy efficient buildings).
Furthermore, "green" or energy efficient facilities have a $5.5 million 504 (second) mortgage limit PER PROJECT making it possible to finance numerous facilities with the program.
Please contact us at 1-800-414-5285 for more info re: Green or Energy Efficient Self Storage Financing.
Higher SBA Loan and Eligibility Limits - Larger Businesses Eligible
The new Self Storage Business guideline also coincides with the following changes:
- New higher SBA 7a loan and eligibility limits of $5 million.
- Larger businesses are now eligible for SBA loans:
A small business is now defined as having a tangible net worth of up to $15 million and net - after tax - income of less than $5 million on average for the last 2 years.
- New higher 504 loan and eligibility limits including the ability to fund multiple large projects if facilities are energy efficient or produce some of their own renewable energy. The energy efficient test simply requires a 10% reduction in energy consumption and it might be possible use it in tandem with the new 504 refinance option. (See refinance info below).
Click here: SBA Green Loans for energy efficient information
Refinance Option for Self Storage Facilities...Time Is Running Out for the 504
The new 504 refinance option is a temporary program offered through the Small Business Administration that is enabling the refinance of many self and mini strorage facilities, but it expires September of this year (2012).
The 7a refinance program will continue to be available.
Click here: SBA Refinance for info on the new refinance provision.
More Detailed Info:
Multiple Self Storage Facilities Now Financeable
All of the recent changes should have a significant positive impact on the Self Storage Industry, especially the increase in the SBA maximum eligibility rules.
SBA 7a loans are now available up to $5 million OR multiple 7a loans can be used to finance (or refinance) multiple properties. This is because the SBA eligibility is not calculated per loan but per borrower/business owner, so having one loan does not disqualify you from getting another. (i.e. you can have multiple loans that total $5 million).
More Eligibility with the 504 Loan Program Might Be Possible
Even higher loan amounts and project costs are possible with the 504 program because the 504 loan program consists of 2 loans - a first mortgage from a bank or lender and a 2nd mortgage guaranteed by the SBA, but only the second mortgage counts toward your maximum SBA eligibility...so if you primarily use the 504 program you should be able to finance more properties.
It is also likely that many storage facility businesses can qualify for a 504 refinance making it possible to access long term low rate financing.
.
Current Market
SBA self storage loans were new to SBA lenders in 2011 and some were slow to warm to the asset class since passive income properties were not eligibile previously.
2012, however, is a different scenario and many lenders now understand the industry better and are actively making loans.
Self Storage Construction Loans
Self storage construction financing is getting easier for strong borrowers, but it can still be a challenge. "Projection based" transactions where borrowers have good cash flow from other properties, businesses or sources are easier to get funded.
Lenders are much more willing to fund refinances, acquisitions and expansions of existing profitable businesses.
Please contact us at 1-800-414-5285 to discuss your individual situation.
