Loan Guidelines for Self Storage Property Financing
Pre-qualifying Criteria:
- Cannot be in a flood zone.
- At least 40,000 square feet of rentable space unless in a large metropolitan area where a smaller facility may be considered.
- No facility older than 10 years.
- Must demonstrate a demand driver: e.g. military base, large apartment complexes or university nearby.
- Acquisitions - at least 15% of the total project cost (acquisition plus closing costs plus other requested uses) must be provided by the borrower as cash equity; any remaining equity can be seller financing provided that no more than 10% of the project cost can be provided by seller financing that has a repayment schedule attached. The balance of seller financing must be on COMPLETE stand-by for the life of the loan.
- No start-ups or construction.
- Debt Service Coverage must be at least 1.25x in each of the prior two years and the current interim period.
- Maximum LTV 70%
Loan Size:
USDA: $250,000 - $5,000,000; SBA: $250,000 - $5,000,000
Eligible Locations:
East of Mississippi
Loan Term Amortization:
USDA: Maximum 30 years; SBA: Maximum 25 years
Collateral:
First position mortgage as certified by title search and title policy on property.
Loan Escrows:
The borrower may be required to contribute monthly to an escrow account for real estate taxes and property insurance.
Appraisal:
Complete summary appraisal required.
Environmental Screen or Phase 1:
Required.
Eligible Principals:
U.S. citizens, or permanent resident aliens. Majority principal owners cannot be on probation or parole.
Recourse:
Every loan will be personally guaranteed by any shareholder with 20% or more ownership in the company.
