The U.S. Small Business Administration (SBA) recently changed its loan guidelines allowing self-storage businesses as an eligible business type.
The SBA changed its ruling for all “passive income” properties, those which rely on rental income and the owner controls both entry and exit. The passive income guidelines affected self-storage, mobile-home parks, office suites, shopping centers and similar businesses. Previously, self-storage facilities were only eligible if more than 50 percent of the business revenue came from sources other than monthly rent.
The new eligibility limits coincides with higher SBA 7a loan and eligibility limits, higher 504 and eligibility limits and extension of the SBA fee waiver. There has also been a change in maximum SBA eligibility, enabling owners of multiple self-storage sites to refinance or purchase additional facilities. The maximum eligibility is now $5 million for regular loans and $5.5 million for green or energy-efficient loans. Longer term loans will also be available, up to 25 years if collateralized by a commercial building. The new SBA loans also have lower equity and down payment requirements.