Unlocking the Mysteries of Financing in Self-Storage Part 3!

One of the loans to seriously consider when you are investing in self-storage is an SBA loan. This is a loan from the Small Business Administration. These loans are designed to help small businesses purchase real estate.

There are a few things that you need to know about an SBA loan. First, you need a lender that specializes in SBA loans. You don’t want to be the person that someone learns on. You want someone that knows exactly what to say to the committee to get your project approved. You want someone who has a relationship with the SBA committee so they have a good idea of what will get approved and what won’t. This way you don’t waste your time.

The requirements for this loan are similar to other loans. You need to have a good credit score, you cannot have had any recent bankruptcies, foreclosures, or tax liens. What makes these loans fantastic is that you can purchase your self-storage property with as little as 10% down. In addition to being credit worthy, you have to meet the definition of a small business. Finally, you must be a US citizen of a legal resident alien. The maximum loan amount for an SBA loan is $5 million. So keep that in mind when you are looking at potential self-storage properties.

The way that an SBA loan works is that you put down 10%, the bank lends you 50% and SBA covers 40%. The great part of this is that instead of having to refinance or having a balloon on your SBA loan, the SBA loan is fully amortized for 25 years and typically the interest rate is below what you will get on the other 50%.

SBA loans are a great way to get into self-storage properties with less money down. If you haven’t researched SBA loans, find a lender that specializes in them and find out how they could work for you. As always, happy investing.