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 we chose the specific recommended lenders we did.
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.
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.
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 fulfil 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.
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.
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 it off your term loan sooner than planned.