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Best Self Storage Business Loans for 2021

Self-storage business loans provide financing that can help you cover construction, asset, and operational expenses. What’s more, there are specific lenders in this field that can help you make the right funding choices. In this article, our experts reveal the best self-storage business loans currently on the market.

Financially Reviewed by Thomas J. Brock

At a glance  People are renting more storage units every year, with the demand only growing. Vacant land is changing into viable sites making room for these commercial entities. Many entrepreneurs are taking advantage of this market, and are looking to find the right funding for their business needs. Our detailed article will help you find the best self-storage business loans and lenders of 2021.

A Brief Overview of The Best Self Storage Business Loans

Here we will outline in summary form the best self-storage business loans. You’ll also find the key features of each loan type and links to our preferred lenders’ sites.

Financing Need

Best Loan Type

Loan Features 

Recommended Lender

Franchise acquisition

Business acquisition loan

  • Amount: Up to $5 million
  • Term: Up to 25 years
  • Interest: As low as 4.75%
  • Time to get the loan: Up to 2 weeks

LendingClub

Construction

Construction loan

  • Amount: Up to $5 million
  • Term: Up to 25 years
  • Interest: As low as 4.75%
  • Time to get the loan: Up to 2 weeks

PayPal Working Capital

Working capital

SBA loan

  • Amount: Up to $5 million
  • Term: Up to 25 years
  • Interest: As low as 4.75%
  • Time to get the loan: Up to 2 weeks

SmartBiz

Utilities, maintenance & payroll

Invoice factoring

  • Amount: Up to 100% of the invoice value
  • Term: When the client pays
  • Factor fee: Typically, 1.00% - 3.00%
  • Time to get the loan: Up to 24 hours

BlueVine

Upgrades & expansion

Term loans

Standard Short-Term Loan Features:


  • Amount: Up to $250,000
  • Term: Up to 18 months

Interest: Varies Time to get the loan: Up to 24 hours

OnDeck

Self Storage Business Loans Explained

In this section, we will break down each loan type, explaining how they can help your business. You’ll also discover why our experts recommended those specific lenders.

1. LendingClub - Best for Business Acquisition Loans

If you want to take over an established company - one that already has operations in place - a business acquisition loan may suit you. There are advantages to taking over an existing operation, for example, you’ll spend less on capital expenses while retaining the current client base. You can also use the sales figures of the existing business, to predict future sales and costs. This information can help out when you apply for financing.

A business acquisition loan may also help you out, if you already have a company, in a different industry, and want to supplement it with a self-storage business. 

LendingClub is our recommended lender for business acquisition loans. It has a detailed quote process and generally offers fast approval. One of the top benefits is that it doesn’t penalize prepayments, which is excellent if you want to finish paying your account earlier than expected.

2. PayPal - Best for Construction Loans

Construction loans provide you with the capital you need to build on your property. You won’t receive the entire amount, as the lender will issue installments based on project milestones. In this way, both you and the lender are protected if you decide not to continue with the development.

After you acquire property for your storage units, it’s time to start building. You may wish to add extra units to the existing facilities on the site. The benefit of this loan type is that you can stop even if you are in the middle of the project. For example, you may decide to have fewer bays than you initially planned for.   

PayPal Working Capital is an excellent lender for this loan type. You will, however, need to have an existing account with PayPal. You can accept PayPal payments from your clients and then use those funds to repay your loan. It’s an efficient system for accounts payable and receivable.

3. SmartBiz - Best for SBA Loans

Some lenders provide Small Business Administration (SBA) loans that have government backing. Thanks to this support, lenders are able to offer lower interest rates and extended repayment periods. However, there are strict requirements you will need to fulfill before you receive SBA loan financing. 

SBA loans are the ideal solution if you’re low on capital and want to purchase vacant land and build. You can view an SBA loan as a combination of business acquisition and construction loans, yet with better terms. An SBA loan can also provide you with an operating budget for the next few years. This may, for example, cover your expenses during a bad season.

Two factors make SmartBiz a leader in the SBA loan department. SmartBiz specializes in both construction and SBA financing and is an approved lender. You’ll also love the competitive rates and long repayment periods that SmartBiz offers.

4. BlueVine - Best for Invoice Factoring

Invoice factoring is a unique financing system whereby lenders buy your current invoices. You will, however, need to prove that your clients have good payment records. With invoice factoring, you can opt for a lower interest rate, but you’ll lose a percentage of the income as part of the repayment process. 

Stormy weather can sometimes damage storage units. Bad weather can, for example, cause a leak that could damage your client’s assets. While you should have an insurance plan in place, you’ll still need to pay for any damages that your insurance won’t cover. Invoice factoring gives you quick access to funds, so you won’t need to rely on your capital or savings.

BlueVine is our top choice for invoice factoring loans. With BlueVine you will instantly receive the funds you need. Also, there's a detailed client portal that you can use to manage your finance options. BlueVine will also let you apply for other loan options, those that are linked to your account.

5. OnDeck - Term Loan

Short- to medium-term loans have higher interest rates and shorter payment periods than many other loan types. Therefore, they’re better suited for businesses that require renovations or upgrades to their property. 

At some point, you’ll want to add advanced technology or additional storage units to your site, or you may reach a point where you want to expand your land. Term loans are ideal in these situations, as you'll also have an existing revenue stream to justify the amount you wish to loan. 

OnDeck is our lender of choice for term loans - in relation to self-storage facilities. OnDeck has lower limits for credit scores and requirements, which means a higher chance at approval. You’ll also receive a discount if you pay off your term loan sooner than planned.

Recommended Reading: Best Retail Business Loans for 2021

How Much Does it Cost to Open a Self Storage Business?

The amount you’ll need to borrow as a self-storage business loan will vary depending on your business approach and current financial circumstances. You might already have land, or you could be buying a company that’s already in existence. In these situations, you’ll need to spend less capital than if you were starting your storage business from scratch.  

Alternatively, you could have identified a need in the market within a specific suburb, which could offer massive potential for profits. You may thus wish to buy a new patch of land and build your storage units from scratch. In this scenario, you will need to take a relatively large loan, for the initial capital injection. 

As such, you may need to borrow anything between $1 million and $3 million. The cost structure below represents opening a business that costs about $2 million to establish:

  • Land: $400,000
  • Construction: $1,400,000
  • Engineering and architecture: $40,000
  • Permits and other fees: $15,000
  • Surveys and testing: $12,500
  • Legal fees: $10,000
  • Builder insurance: $2,250
  • Marketing campaigns: $35,000
  • Office equipment: $10,000
  • Closing expenses: $37,500
  • Interest: $125,000

In addition, you will need to factor in the daily operating expenses of your business. Such expenses may include employee wages, maintenance, security, utilities, and insurance. 

Recommended Reading: Best Transportation Business Loans for 2021

How to Choose the Best Self Storage Business Loans

Now that you’ve seen the best self-storage business loans available, the tricky part is selecting the one that will work best for you. 

Before you proceed, there are some factors to consider. Firstly, look at the loan stipulations. You’ll need to assess, for example, if the lender will allow you to buy an existing site with bays, or if the lender prefers that you start from scratch. While SBA loans have a lot of benefits, you should evaluate if you want to be tied down by an SBA style contract.

You may want to check if a term loan, or access to instant funds, better suit your needs. You should also consider the approval time, as you could lose a bid on a site if you need to wait too long for your loan amount to be approved.

See Our Additional Guides on Industry-Specific Loans

Bottom Line

Acquiring self-storage business loans can be daunting, but it’s not impossible. All you need is the right approach with a lender that offers flexible repayment options. We hope you’ve enjoyed this detailed article and that you now have a better understanding of the different funding solutions available for self-storage businesses.