Self-storage construction loans are one of the more difficult types of financing to obtain unless your company already owns them and has a track record. While self-storage facilities are one of the more desirable commercial properties to a bank or to lenders in general, start-ups are usually more difficult simply because of the lack of financials and the “unknown” factor. Typically, but not always, there is a two part component to it: The construction loan and the take-out loan. Typical terms for self-storage construction loans are:
Loan Amounts: $250,000 – $10,000,000
Terms: 6-12 Months
Interest Rate: Prime + .0% -2.75% (Varies by credit risk)
Loan To Value: 50 – 90%
Prepay Penalties: N/A
In terms of the permanent, or the take-out loan, if you currently do not own any self storage facilities now, it is entirely possible that SBA financing (either 7(a) loans or 504) may be the appropriate financing for you. If you currently own sites, conventional financing may be the best option. Conventional can be bank financing, CMBS, life insurance or other instruments.
- Do your home prior to calling the lender
- Prepare a professional business plan
- Try and have a feasibility study done
- Have plans drawn up instead of a vague idea as to appearance
- Have a good, itemized bid from a contractor
- Try and use contractors that have built other self storage facilities
- Contact your local city / county offices about the permit process
To pre-qualify for financing, download the following forms and provide the following information. Click here to find the normal documents you will need pre-construction, during constructing and post-construction.
- Loan Application (pdf) (Word) or Apply Online
- Personal Financial Statement (pdf) (Word)
- Resume (pdf) (Word)
- 2013 Year End Business Financials
- 2014 Year-To-Date Business Financials
This is a general guideline for documents normally needed depending on the type of financing being applied for.