SBA Self Storage Loans

Why Self Storage Underwrites Well

Lenders gravitate toward self storage because the underwriting is clean: minimal labor, no inventory risk, no seasonal volatility, and dispersed tenant credit risk across hundreds of small monthly contracts. A mature facility with 85%+ occupancy generates predictable monthly cash flow that easily supports SBA debt service at 1.30x+ DSCR.

Acquisition Underwriting

For acquisitions, lenders focus on trailing 12-month revenue, occupancy trend (look for stable or rising), competitive supply within a 3-5 mile radius, and rate growth potential. Established facilities in markets with limited new supply trade at lower cap rates and command tighter SBA terms.

Ground-Up Construction

New construction is more involved. The 504 program allows ground-up self-storage builds, but requires a robust feasibility study, supply analysis, and conservative absorption projections (typically 24-36 months to stabilize). Borrower equity often runs 15-20% on construction deals.

Climate-Controlled vs Drive-Up

Modern climate-controlled facilities command higher rents and stronger occupancy, but cost more to build. Drive-up facilities are cheaper per square foot but trend toward lower per-foot revenue. Lenders evaluate both formats; the right mix depends on local demographics and competition.