Self-Storage and SBA Loans. Why Are These Ideal Partners?

If you are not familiar with SBA loans, today is the perfect day to talk to an SBA lender. If your current lender doesn’t specialize in SBA loans, you want to find a lender that does. You don’t want your lender to learn how to do SBA loans on you. They are complex loans. Your lender needs to know all the right people, how to present your loan to the committee, and how to put the package together in a way that will be appealing. Someone who is brand new won’t know how to do that as well as someone with years of successful experience.

First of all, you must be a small business in order to qualify for an SBA loan. They only lend to businesses. The great news is that you are buying a business when you buy a self-storage property. You are buying property and a business. This allows you to take advantage of this loan. There are other requirements that you have to meet. You can find out what those are by talking to your lender or going to the SBA website. You absolutely cannot be delinquent on any federal obligations, and you cannot have filed bankruptcy. You usually need perfect credit or close to perfect credit.

The second thing to know about an SBA loan is that you only have to put 10% down. However, they do not lend you the entire amount of the property. Instead, you will have a traditional lender who will lend you 50% of the value of the property. This will be a standard loan at the going interest rate. This loan will probably have a balloon payment in 3 to 7 years so you will have to refinance. SBA will lend you the other 40% at a lower interest rate that is fixed for 20 years. This means that you don’t have to constantly refinance, and you don’t have to worry about interest rates going up.

By only having to put down 10% of the purchase price, you can keep your additional cash for other projects. This allows you to grow at a faster rate than if you had to put down 35% to 40% on each property. It will also keep more cash in your pocket because of the lower interest rates. Don’t wait, talk to an SBA lender today to find out how you can take advantage of this loan. As always, happy investing.