Let the SBA Pay for Your Storage Facility
If you need another reason pull the trigger on your next self-storage or boat and RV storage facility, the Small Business Administration just gave you a big one:
as part of the recently passed federal stimulus package, the SBA will make borrowers' first six payments for new SBA 504 and 7a real estate loans.
According to the Washington Business Journal:
The SBA is paying up to $9,000 a month toward principal and interest for up to six months for any loan originated between Feb. 1 and Sept. 30, 2021. That potentially adds up to $54,000 in essentially free principal and interest payments.
The SBA is waiving origination fees for loans made during that same Feb. 1-Sept. 30 time period in 2021. Those fees are often 3% to 3.5%.
Loans are offered at terms of up to 25 years and up to a 90% guarantee, and certain loans include the waiving of some prepayment penalties.
These terms apply to both purchasing an existing self-storage or boat and RV facility, and developing a new self-storage or boat and RV facility. But you need to hurry because there is only a certain amount of money allotted to this program and you need to get your deal done before it runs out.
Although it has not been my personal experience that SBA loans close as quickly as conventional loans, they are supposed to be comparable, especially if you work with an SBA-preferred lender. Please reach out if you'd like a referral.
Either way, there are many advantages to SBA loans even if you don't make the September 30 deadline or the money runs out before your deal is closed. Not least of which is the low down payment requirement.
I hope this inspires you to get your next facility under contract (and have Self-Storage Ninjas do your acquisition audit) and make a move on that next parcel of land you've been evaluating (and have Self-Storage Ninjas do your feasibility study) or both!
Update: March 1, 2021
The SBA has revised some of the provisions of the Section 1112 payments. Key changes include:
For all 7a or 504 loans approved September 27, 2020 or prior that were not fully disbursed by September 27, 2020: Loans will now only receive 3 months of payments under the first round of payments authorized in the CARES act instead of the 6 months.
Second Round Section 1112 payments:
For all 7a and 504 approved before March 27, 2020 the SBA will make 2 months of payments instead of 3 subject to a monthly payment limit of $9,000
For 7a or 504 loans for borrowers in the NAICS codes beginning with 61, 71, 72, 213, 315, 448, 451, 481, 485, 487, 511, 512, 515, 532, or 812 the SBA will make an additional 3 months payments instead of the previously announced 5 months.
Loans approved between March 27, 2020-September 27, 2020 will not be eligible for any payments under the Second Round Section 1112 payments. This was previously approved that they may be eligible.