RV Storage and Boat Storage facility financing, including ground up construction, is available with as little as 10% down via the SBA 7a program. Almost all of the same guidelines apply to boat and rv storage as for self storage facility financing including the fact that the 10% down payment can come from borrowed funds.
The loans are available for both indoor climate controlled or outdoor storage which can be anything from a large lot with fencing, lighting and a small office to a high end climate controlled building.
For outdoor storage, some lenders will require some amount of structure on the property – typically some canopies for covered storage – and others are okay with less improvements.
As a general rule, the more basic the property, the better the location or the stronger the transaction needs to be. In other words, if it is an existing business, then the financials for the last few years need to show good cash flow. If construction, then the business plan and location need to be solid. If it is a refinance then solid income for the last few years will do the trick.
RV and Boat Storage Facility Maximum Loan Amounts
Loan amounts can be quite large depending on which loan program you go with and how much you can put down. Realistically, the maximum loan amounts with 10% down would be approx $10 million give or take $500K and projects between $5 million and $10 million would have to be quite strong. The project and the project principals would need to be strong financially, have solid credit and good jobs/business ownership experience.
With only 10% down you are restricted to the SBA 7a program and generally would be looking at a floating rate loan between Prime + 1% and Prime + 2%. This may not seem ideal given that Prime is rising, but there are some factors that can make you feel better about a loan like this. Here are a few:
- If you are building a facility some lenders will allow you to build into the loan enough working capital to make the payments for the first few years. This is significant in that it allows you to come in with just 10% on the total project costs and allows you to focus your energy on ramping up occupancy.
- The 10% equity injection can be from funds that you borrow, cash from investors or from gifts. Again, this is a very flexible guideline and one that can make a lot more transactions possible.
- You can have (old) bad credit and still possibly qualify. This would be evaluated on a case by case basis, but if you can show that whatever happened in the past is isolated in the past and the reason for what happened is acceptable to a lender AND you can show that you have “recovered” than you have a shot. (Bankruptcies need to be at least 5 years old – typically).
- The prepayment penalty is very short and reasonable. You can pay off the loan after just 3 years with no penalty or after 2 years and pay just a 1% penalty, so if your plan is to get a facility built, ramp up occupancy and then either sell or refinance then you can do that.
There are numerous other advantages and “caveats” and for the full list you may want to visit my post about SBA self storage financing.
Bottom line – this is an extremely viable form of financing if you want to capitalize on the large segment of the population that plans to purchase or currently owns a boat or rv and you are looking for maximum leverage.
Contact me at jking (at) green commercial capital (dot) com or call 1-800-414-5285 if you would like more information