Finding money to buy or build self-storage has been a challenge in recent years, but the U.S. Small Business Administration (SBA) is providing hope to independent owners and investors. Due to recent changes in the SBAs loan guidelines for passive-income properties, self-storage now qualifies as an eligible business type. What does this mean for you?

Passive-income properties are those that rely on rental income and for which the owner controls entry and exit, for example, self-storage, mobile-home parks, office suites and shopping centers. Until recently, self-storage facilities were only eligible for SBA loan money if more than 50 percent of their revenue came from a source other than monthly renta practically impossible order in this industry unless you do mad amounts of ancillary business. The new guidelines open doors to anyone looking to refinance, acquire or build self-storage.

Theres more good news, including higher loan and eligibility limits for the SBA 7a and 504 programs. You can now use SBA financing to acquire or refinance multiple self-storage properties since eligibility is not determined by the number of loans but by the total amount of eligibility used. Maximum loan eligibility is $5 million for regular loans and $5.5 million for green or energy-efficient loans.

In addition, there are longer loan terms available, up to 25 years, and SBA loans have lower equity and down-payment requirementsas low as 10 percent to 20 percent for self-storage. SBA financing can also be used to make property improvements, a real benefit for older properties looking to compete with newer facilities in their markets. Add to that the beginning of a two-year window that will allow SBA 504 program to be used for refinancing, an extension of the SBA fee waiver, and a temporary 90 percent SBA guarantee. Its an all-around heartening offer for our business.

Why the change? The Small Business Jobs and Credit Act, passed in September, responsible for extending the fee waiver and keeping the loan-guarantee limits higher than the historical standard. The SBA estimates that the funds provided by the bill will leverage $14 billion in small-business lending. But the fee waiver could run out by the end of the year, so act quickly if youre enticed. If approved, your loan could take as little as 30 to 60 days to close, according to SBA.

There is a small side effect of the act, however, that could mean regulatory headache for all self-storage operators, even those who dont touch SBA money. The act requires that any business receiving income from a rental property must file an IRS Form 1099 for any purchase it makes above $600. For example, if you hire a paving company to fix your parking lot, and the bill is more than $600, you must receive and file a 1099 for that purchase.

Not only does this create a compliance issue for storage operators, it creates a paper trail for tax commissioners that could ultimately cost you more money in sales tax. Why? If a 1099 does not clearly demonstrate state sales tax was paid on a taxable product or servicefor example, if the vendor simply included the sales tax in the total price, which is very commonyou could be held liable for payment of that tax, even if it was technically paid as part of the original cost. Watch the ISS website on Nov. 19 for a detailed article on this topic, written by legal expert Jeffrey Greenberger.

In the meantime, consider the opportunities presented now by the SBA. For more information, you can attend a seminar titled Using SBA Financing for Self-Storage, presented by Georgia Ragsdale during the Inside Self-Storage World Expo in Las Vegas, March 14-16. Ragsdale, CEO of Best American Financial Services LLC, will discuss how to get financing from the SBA, what loans are offered, who qualifies, what to expect when submitting your application, and the differences between SBA and other commercial loans.

The upcoming year could be a banner one for small independent business such as self-storage. Take advantage of the possibilities to grow your enterprise.