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Self Storage Business Loans: Best Options to Consider in 2022
Self-storage units are a lucrative business but they’re notoriously expensive to build or acquire and require regular maintenance to keep renters happy and their stuff safe. Thankfully, there are many loan options available so you can successfully finance your self-storage business.
Self-storage business owners incur a wide range of costs. While self-storage construction can be expensive, that’s just one of many expenses that needs to be covered.
Once you’ve built the facility, you must make sure that everything stays in working order to keep your clients’ belongings safe. That includes maintaining and replacing damaged rolling doors, climate control systems, security cameras, and protective fencing, just to name a few.
The good news is there’s a variety of self-storage financing available to help you manage the costs of running your business. This detailed guide will help you assess the best options to find one that meets your needs.
Our Top Picks for Best Self Storage Business Loans
- Multiple loan types available
- Funding in 48h
- Soft credit pull
- Ideal for plenty of industries
- Approval not solely credit based
- Early payoff discounts
- Hundreds of financing options
- Use the loan for any purpose
- Fast process
How to Choose the Best Self-Storage Loan
To find the best loans for your self-storage business, you’ll need to do a bit of research and compare lenders. Our experts recommend using the following criteria to help select the right loan; these are the same factors they used to provide the recommendations found in this article:
- Loan Features: Make sure to check the loan features including loan terms, repayment optionality, and loan amounts to find self-storage financing that meets your needs. For example, if you’re building a new self-storage facility and have to borrow several million dollars, you can eliminate lenders that only offer low lending amounts.
- Application Process: The application requirements vary from lender to lender; some may require a hard credit pull and in-depth financial documentation while others can make an offer with a soft credit pull and basic business information. If you need cash quickly to cover unexpected repairs or operational costs at your storage facility, work with a lender that offers a fast, noninvasive application process and quick disbursement.
- Interest Rates and Fees: Before applying with a lender, you should have a basic idea of how large of a loan repayment you can afford. The size of your repayment is typically determined by how much you borrow, interest rates, term length, and additional fees. Apply only to lenders whose rates you can afford and avoid those that will strain your budget.
- Qualification Process: You should also take loan qualifications into account as you evaluate your options; do you meet the lender’s minimum credit score, annual revenue, and business history requirements? If your self-storage unit has only been open for six months and the lender’s minimum requirement is one year, you should look for other options.
- Customer Support: Having access to customer support is also vital; at some point during the life of your self-storage loan, you’ll probably need assistance. Make sure the lender offers multi-channel access to a live Customer Service Representative plus supplemental information and tools on their website.
- Online User Reviews: Check customer ratings and reviews, especially on independent sites like Trustpilot. Other borrowers will let you know what to expect from the lender, if they had any issues with their storage unit financing, if they recommend the lender, etc.
- Perks and Bonuses: You should also take into account any additional perks and bonuses the lender may offer, such as payment flexibility, advanced technology, and advertising transparency. For example, if the lender requires you repay your self-storage loans every week, but you want to pay monthly, consider applying with a different provider.
Best Self Storage Loans for 2022 - Full Overview
In this section, you’ll find detailed descriptions on some of the best options for self-storage financing.
1. Biz2Credit - Best for Commercial Real Estate Loans
Biz2Credit offers a variety of options including commercial real estate loans that are perfect if you’re adding new bays at your current location or building a new storage site. You can borrow large amounts—up to $6 million—but eligibility requirements are strict; you must be in business 18 months, earn $250,000 in yearly revenue, and have a credit score of 660 to apply.
Pros
Cons
Biz2Credit offers self-storage construction loans in any amount between $250,000 and $6 million. Borrowers must repay these loans within one to three years at APRs starting at 10%. You may also be charged an origination fee between 1% and 6% of the original loan amount.
To qualify for a Biz2Credit commercial real estate loan, you’ll need to have $250,000 in annual revenue, a 660 credit score, and 18 months in business. Biz2Credit also offers term loans and working capital loans, though the qualifications vary slightly; these are a good fit if you need to cover staff costs, install a new security system, or pay for unforeseen expenses.
The Bottom Line
Biz2Credit’s self-storage construction loans are perfect if you’ve been running a successful storage business for more than a year and a half and want to expand your current facility or build a new one. Loan limits are high—up to $6 million—but you’ll need a high credit score of at least 660 to qualify.
Try Biz2Credit
Read more in the full Biz2Credit review
2. Fora Financial - Best for Short-Term Loans
Short-term loans through Fora Financial are an excellent financing option for self-storage facilities that need cash fast. The application process is simple and requires little documentation with disbursements arriving as soon as 24 hours after approval. These are a great choice if you encounter unexpected expenses, like replacing broken rolling doors in your storage facility.
Pros
Cons
Fora Financial offers short-term self-storage loans in amounts ranging from $5,000 to $500,000. Loan repayment must be made within four to 15 months. The APRs for these loans aren’t publicly disclosed, so they may be higher than average.
Fora Financial makes these loans available to self-storage owners with poor credit; you only need a credit score of 500 to apply. The requirements for annual revenue and business history are also easy to meet—you must be in business for six months and earn $12,000 on average per year to qualify.
The Bottom Line
Short-term self-storage loans through Fora Financial are a great option for owners who need a quick infusion of cash, especially if they have limited annual revenue or a low credit score. Funds are disbursed quickly, making these the ideal option if you need to pay for unexpected expenses, like replacing the environmental control system in your storage units.
Try Fora Financial
Read more in the full Fora Financial review
3. Torro - Best for Start Up Capital Loans
There are few financial institutions willing to lend money to companies that are just starting out; most want to see a proven track record of success before offering a loan. Torro is an exception—they’re one of the few lenders who provide start-up capital loans to new businesses, making these the perfect option if you’ve just opened your self-storage unit and need some cash to keep growing.
Pros
Cons
Unlike other lenders, Torro offers start-up funds to newly-founded companies. These loans can be taken out in any amount up to $100,000 and can be used for any business need. Repayment terms range from 12 to 48 months with APRs up to 36%. A loan origination fee of 5% is also charged for start-up loans.
To qualify for a start-up loan through Torro, you should be earning roughly $5,000 per month. While it’s likely you can find a start-up loan with a credit score of 680, for the best loan options your credit score should be at least 700. Torro also offers working capital loans with similar features and requirements.
The Bottom Line
If you’ve recently opened your storage facility and require additional funds, then a start-up loan from Torro may be exactly what you need. The required time in business is less than six months and funds can be used however you see fit. However, keep in mind that credit requirements are stringent; you need a personal credit score of at least 680 to apply.
Try Torro
Read more in the full Torro review
4. Bluevine - Best for Line of Credit
A line of credit through BlueVine is a great option for self-storage owners who want ongoing access to cash for unexpected expenses like emergency repairs or renovations. With this type of loan, you’re approved for a specific amount up to $250,000 and can make draws whenever you need to. Meant to be a short-term option, these loans must be repaid within six to 12 months.
Pros
Cons
BlueVine offers a line of credit to self-storage owners in any amount between $5,000 and $250,000. APRs start at 4.8% for well-qualified borrowers with repayment expected in six to 12 months. BlueVine charges a loan origination fee of 1.60% to 2.50% per draw but does not assess any prepayment or maintenance fees.
To qualify for a line of credit through BlueVine, you’ll need to be in business for at least six months. The minimum annual income required is $120,000 and it’s recommended you have a credit score of at least 600.
The Bottom Line
A line of credit is an excellent choice is you’re looking for flexible self-storage financing. You may be approved for up to $250,000 but need to repay any amount you draw within six to 12 months. That makes a line of credit ideal for when you need to cover unexpected expenses like broken rolling doors, a new keypad entry system, or cracked security cameras.
Try BlueVine
Read more in the full BlueVine review
5. Credibly - Best for Long-Term Business Expansion Loans
If you’re looking to get a loan to expand your self-storage business, Credibly is a good place to start. They offer storage unit financing in amounts anywhere from $150,000 to $5 million with repayment terms between three to ten years, making these an excellent solution if you plan to build more units to expand your already-thriving business.
Pros
Cons
Credibly offers a wide range of self-storage loan options, including a business line of credit, working capital loans, business expansion loans, and SBA loans. While all of these options are useful, Credibly’s business expansion loans are the best choice for experienced self-storage owners who are looking to further develop their business.
Business expansion loans can be taken out in any amount between $150,000 and $5 million. APRs for these loans range from 8% to 25% and must be repaid within three to ten years. Though the minimum credit score, time in business, and annual revenue requirements for other Credibly loans are relatively low, the qualifications for business expansion loans are not publicly available; check with the lender for more information.
The Bottom Line
If you already run a successful self-storage company and want to expand your business, this is the perfect loan for you. Whether you’re adding more units, reconfiguring existing ones, updating your security system, hiring more staff, or building a new facility, you can borrow as much as you need up to $5 million and have up to ten years to repay the loan.
Try Credibly
Read more in the full Credibly review
Best Self Storage Loans - Features Comparisons
The following table provides a summary of loan features from our recommended lenders.
| Company
|
Min. Credit Score | Min. Time in Business | Min. Annual Revenue | Loan Amount | Interest Rate |
| Fora Financial | 500 | 6 months | $12,000 | $5,000-$500,000 | Varies |
| Biz2Credit | 660 | 18 months | $250,000 | $250,000 - $6 million | Starting from 10% |
| Credibly |
Not disclosed | Not disclosed | Not disclosed | $150,000 to $5 million | Between 8% - 25% |
| Torro | 680 | Less than 6 months | $5,000 per month | Up to $100,000 | Up to 36% |
| BlueVine | 600 | 6 months | $120,000 | $5,000 to $250,000 | Starting at 4.8% |
What Are the Costs of Running a Self-Storage Business?
There are several costs to consider when planning your own self-storage business. including:
- Land: If you’re starting your self-storage business from scratch (as opposed to purchasing one that’s already in operation) one of the biggest expenses will be acquiring land to build on—this could run you anywhere from $100,000 to $400,000 depending on your location.
- Construction: Construction costs are another major expense; to build your storage units, you’ll likely need between $1,250,000 and $3,750,000 for a 50,000 square foot facility.
- Other Construction-Related Expenses: In addition to the cost of construction, you’ll also need to pay related expenses such as engineering and architecture fees, land surveys and soil testing, legal fees, builder’s insurance, and permits. These can add up to around $80,000.
- Office Equipment: When tallying costs, you should also include any equipment necessary to run your self-storage business, including computers, printers, telephones, filing cabinets, and software, which can reach $2,000 or more.
- Marketing: Once your facility has been built, you’ll need to advertise your services to the local community to attract customers. This should include a professional website plus ads through either radio, TV, newspaper, mail flyer, or email. Marketing can cost you several thousand dollars, depending on which avenues you select.
- Operating Expenses: Don’t forget to add operating expenses into your total. This includes things like wages, loan payments, insurance, utilities, maintenance, property taxes, and security, which can add up to $5,000 or more per month.
Types of Loans Available to Self-Storage Facility Owners
Some of the most common types of loans for a self-storage business include:
- SBA Loans: These loans are backed by the Small Business Administration and often offer low APRs with extended repayment terms; however, applying can be difficult due to a high standard for qualification and required documentation.
- Commercial Real Estate Loans: The purpose of these loans is to provide financing for the purchase of land and construction of your self-storage unit. Maximum loan amounts are typically high but other features will vary based on the lender and your credit profile.
- Start-Up Loans: Start-up loans were designed to provide cash to businesses that are just starting out. Because it’s riskier to lend to companies with a limited business history, these may incur higher interest rates.
- Business Line of Credit: A business line of credit is a great option for self-storage owners who are looking for maximum flexibility; you can draw money against your line of credit for any purpose whenever you need a quick influx of cash.
- Short-Term Loans: Short term loans are ideal when you find yourself with unexpected expenses, like emergency repairs. These loans often have high APRs and need to be repaid within the year.
- Working Capital Loans: Working capital loans are designed to help cover the cost of running your business. These are especially useful whenever you experience unforeseen gaps in your cash flow. Loan features on working capital loans vary by lender, so shop around to find one that best meets your needs.
You can get these loans through several different avenues, including a bank, credit union, or alternative lender. While you may find lower APRs and longer lending terms at banks and credit unions, their loan qualifications are much more rigorous, which can make it difficult to secure the funding you need to build your self-storage business.
How to Use a Self-Storage Loan?
There are various ways you can use financing for self-storage facilities, such as:
- Acquisition: Self-storage loans can be used to purchase a facility that’s already been built and has been running for several years. Though most acquisitions of already-existing storage facilities are done by investment firms, there may be local, independent self-storage units that come up for sale from time to time.
- Construction: Self-storage financing can also be used if you’re planning on constructing a new facility (as opposed to acquiring a used one). Keep in mind, you’ll need to find a lender that offers high loan limits because construction costs can run into the millions of dollars.
- Expansion: You can also take out loans to expand your current self-storage business. These loans can cover practically any type of expansion including adding more units, building a new facility, hiring more staff, or improving security features.
- Renovation: Renovations are another typical usage for self-storage loans. Some of the more common renovations that owners seek funding for are rolling door replacement, reconfiguring storage space, the installation of climate control systems, adding keypad entry, and improving curb appeal.
- Maintenance: Financing can also be secured to help with maintenance of your storage facility. For example, you may need to patch up cracks in the wall or add a new coat of paint onto the exterior.
How to Qualify for a Self-Storage Business Loan?
Here are a few tips to improve your chances of qualifying for a self-storage loan.
- Know how much money you need and how it will be used.
- Understand your own credit profile.
- Decide how much you’re willing to spend in monthly payments.
- Prepare the necessary documents.
- A current profit and loss statement
- Three years of business and personal tax returns
- A report on occupancy and rental rates
- A copy of your business plan
- A market feasibly report if the loan is for new construction
- Apply for loans that match your needs and qualifications.
Before you choose a lender and a type of loan, it’s important for you to clearly define how much you need to borrow and the loan’s intended purpose. This will help you eliminate any loans that don’t match your requirements.
You should also have a clear understanding of your own credit profile including your personal credit score, how much revenue your self-storage business makes each year, and how long it’s been operational. Armed with this knowledge, you can focus solely on loans you qualify for and avoid wasting time on those you don’t.
It’s also important to know how much you can afford to pay back each month. Don’t overborrow just because the lender is willing to loan you more money; set a certain amount in advance before you start shopping around to avoid burdening your business with too much debt.
The documentation required will vary by lender, but you should be prepared to provide:
To improve your chances of being approved for self-storage financing, make sure to only apply for loans that both meet your needs and match your qualifications. For example, don’t waste your time applying for an expansion loan with rigorous qualification requirements if you need start-up funds and have poor credit.
Conclusion
Operating a self-storage facility is a lucrative business opportunity that has been increasing in popularity over the past several years. Whether you’re acquiring an already-existing storage unit, building a new facility, or updating your current one, there is a wide range of self-storage financing options available to you. All you need to do is evaluate your options and find the one that best meets the needs of your business.
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About the Author
Christi Gorbett
Freelance Content Marketing Writer specializing in finance, personal development, education, marketing, web development, food & beverage manufacturing, pet, and contracting/home improvement niches.
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