Mini Storage Financing: These Loan Types Can Grow Your Business

September 29, 2022

Mini storage facilities are an appealing choice for commercial real estate investors and business owners because of their ease, stability, and profitable business model. If you are considering buying a storage business – or need financing for self-storage construction and expansion – the first step is to evaluate the available storage loan options.

Discover the four most common types of bank loans for the storage industry, how they can help grow your business, and how to apply for mini storage financing.

Four Types of Loans for Mini Storage Businesses 

Owning and developing a mini storage facility will require financing to pay for the land purchase, cover construction costs, fund renovations, and protect your cash flow. These four storage loan options allow you to meet short-term needs and achieve long-term goals for your business. 

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1. SBA loans

SBA loans are federally-backed loans offered through the Small Business Administration that are ideal for individuals or businesses that might not qualify for conventional financing. These are some of the most popular loan choices for small business owners because of their flexibility and favorable repayment terms.

– SBA 504 loans are larger, longer-term loans that offer fixed-rate financing for purchasing land, constructing a new facility, or buying and improving an existing storage business. These loans require a down payment of up to 10% with an amortization period of between 10 to 25 years for approved borrowers.

– SBA 7a loans are smaller loans that generally offer lower monthly payments, as well as variable interest rates, shorter repayment terms, and higher down payments. These loans can range in size from $125,000 to a maximum of $5 million, and they’re more commonly used to fund expansions and renovations, working capital, or business purchases such as equipment, furniture, and inventory.

2. Construction Loan

If you have financing for a commercial land purchase but need a loan for building your mini storage facility, construction loans are an ideal solution. This financing solution allows your company to pay for construction projects while potentially minimizing the impact on your daily business operations.

Business Construction loans have loan terms of between 12 to 18 months, a down payment requirement of at least 25%, and an option to automatically convert into a permanent mortgage once construction is complete.

3. Improvement Loan

An improvement or renovation loan gives your business the funding needed to make improvements or building reconfigurations after buying an existing mini storage facility.

This type of loan will allow your business to support customers by offering improved entrance gates, enhanced security monitoring systems, reconfigured storage units, and newer HVAC systems.

4. Term Loan

A term loan may be the best option for your mini storage business if you need help managing cash flow, particularly if you are a new business building up your occupancy rates. Financing from a short-term loan gives your business access to funds to cover emergency expenses, unexpected opportunities for growth, or cover everyday costs such as supplies or property maintenance.

Grow Your Business with Mini Storage Financing 

Financing options can benefit your mini storage business in three key ways:

1. Ability to invest back into the business. Bank loans allow you to invest back into your business by making improvements that will increase storage unit occupancy rates and revenue, whether you plan to upgrade existing buildings or add on additional units.

2. Provide a stable cash flow. Term loans provide working capital that can improve daily cash flow, potentially allowing your business to meet financial obligations such as taxes, payroll, utilities, and other daily expenses.

3. Opportunities for future growth and expansion. Access to storage loan funding can give your company the financial strength and stability needed to seize opportunities for growth and expansion when the time is right. 

How to Apply for Mini Storage Financing 

Applying for a mini storage loan begins with evaluating your business needs, including the property and structures being purchased, future revenue projections, and any needed renovations or improvements.

When you work with Texas Gulf Bank for mini storage financing, you will benefit from a streamlined application process. One of our qualified lenders will talk to you about your business goals, we will perform an initial business and property assessment, and we will ask that you provide the following documentation as part of our review:

• Completed loan application.
• 3 years of personal and business tax returns.
• 3 years of year-end and current business financials.
• Construction design.
• Building schedule.
• Construction budget.
• Future-looking pro forma with your company’s expected operating income and expenses once the facility is operable.

Once the required documentation is submitted, our internal review team will evaluate your application and make a final determination of loan approval. Because our decisions are made in-house, we offer an expedited review that exceeds the industry standard. If approved, you will quickly gain access to funds to begin the next steps.

Choose Texas Gulf Bank for Your Mini Storage Loan Needs 

With over 100 years of business lending experience throughout the Texas Gulf Coast and a commitment to building strong customer relationships, Texas Gulf Bank is the ideal partner for your mini storage financing needs.

Our team of experienced loan officers can guide you through the process of constructing a new facility or purchasing and improving an existing property. We will ensure a smooth path towards mini storage ownership.

If you are ready to begin the application process for a mini storage loan, contact us to connect with a loan officer today. Or, you can complete the contact form below to speak with an expert loan officer.

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