Equity Funding Blog

Funding for Self Storage Businesses

Funding-self-storage-businesses

The market for self storage facilities is booming. Even though the average size of new homes is around 2,500 square feet, up 15% over the past 20 years, 10% of the country rents self storage units. Why? Because families are out of space, an increasing number of adult children are moving back home, and a credit crunch is limiting families’ mobility to bigger houses. None of these trends show signs of slowing down.

 

This translates into a $30B industry that is growing at 3% a year, with unit occupancy steady at 90% even as rents are rising 3% a year.

 

The question is: How can you get financing to take advantage of these demographics and market opportunity? Here are your options:

– With a proven track record of positive net revenues, seek a traditional bank loan.

– Go for an SBA loan. While the paperwork involved can be formidable, SBA lenders are hungry for solid businesses like self storage facilities.

– Consolidate your current loans to getter a lower rate, using the spread to finance growth or acquisition.

– Use a variety of alternative lenders who can leverage your operational and financial strength to provide funds for construction, upgrades, or expansion.

– Seek an equity partner who will swap funds you need to grow for a percent of ownership in your company.

 

You’re an expert in your business but it helps to have a partner walk with you though the fundraising process. Typically, your local bank is a good place to start. If you live in a larger metropolitan area, seek non-debt funding from the variety of equity investor groups in your area.

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