Wisconsin investors use SBA loan for self-storage purchase

12/20/2011

Earlier this year, the Small Business Administration altered its lending guidelines to include self-storage businesses as an eligible entity, according to Inside Self Storage.

"The SBA changed its ruling for all 'passive income' properties, those which rely on rental income and the owner controls both entry and exit," the news source notes. This effected self-storage facilities, mobile homes, office suites, shopping centers and similar businesses.

Previously, self-storage facilities were only eligible for an SBA loan if more than 50 percent of business revenue came from sources other than monthly rent.

Furthermore, by increasing the maximum SBA eligibility for regular loans to $5 million, owners of multiple self-storage units can refinance or purchase more facilities.

Investors represented by Egg Harbor, Wisconsin-based Investment Real Estate Specialists recently took advantage of the new rule by purchasing Carter Storage in Genoa City using an SBA loan, the news source notes in a separate article.

The property, which contains 52 units of varying sizes and totaling more than 9,000 square feet was sold at 9.45 percent cap rate. Carter Storage had been on the market for the past three months.