SBA loan guidelines were changed recently to allow self-storage, mini-storage and mini-warehouse businesses as an eligible business type. Previously self-storage facilities were only eligible if more than 50% of the business revenue came from sources other than monthly rents. The new SBA guidelines now say that a business with “passive income” (i.e., rental income) where the owner controls both entry and exit is eligible; this now makes almost all mini-storage facilities eligible for SBA financing.
“I recently had a discussion with Kevin Monahan of Sussex Business Lenders regarding SBA lending opportunities for self-storage facilities,” said Michael D. Sneden, Executive Vice President at ValueXpress. “Kevin is my go-to guy for everything SBA. Kevin has more years of experience in SBA lending than I can ever possibly achieve.” Kevin said the SBA lending market in the New York metro area is saturated with experienced lenders who know how to aggressively make loans on typical SBA-eligible properties. But guess what, Kevin figures these lenders have no experience in self-storage and probably will take a while to become comfortable with the product type. I bet Kevin is right on the money.
“This got me thinking about ValueXpress,” Sneden said. “We are very experienced in the underwriting of self-storage properties as an active originator of CMBS conduit self-storage loans. With the CMBS market not interested in smaller (< $5 million) self-storage loans, the SBA can fill the gap. Plus, with our experience, we can underwrite the loans immediately and get out ahead of the competition. Thanks to my conversation with Kevin, I got out a bulletin to our partner banks to seek out self-storage loans as an opportunity in 2011.”