SBA financing can be powerful, but it is not magic.
Because self storage is both real estate and a business, it qualifies for SBA loan products. SBA 7(a) and 504 programs can offer higher leverage, up to 90 percent, although the 504 program tops out at 85 percent for new businesses and elevated interest rates can constrain proceeds. For owner-operators, SBA financing may open the door to a smaller acquisition or development. But borrowers still need to prove feasibility, experience, repayment capacity, and compliance with SBA rules. Higher leverage also means less room for mistakes if lease-up is slower than expected. One of our favorite uses for SBA is purchase than expansion. There is the ability to achieve 100% financing of expansion with the SBA so a phased strategy of acquisition, stabilization, and then expansion is a good use case.