Mini Storage Building Loans

Many large lending institutions do not like to lend on mini-storage properties despite the borrower having solid credit and the property being in good condition. They think the loan is too small and simply don’t want to fool with it. The fact is that mini storage properties can be great investments. These investments have proven successful over the last two decades. People move and accumulate a lot of property, so there is always a need for mini storage buildings.

Mini storage properties that are stabilized and are located in high traffic metropolitan areas are good investments. Construction should be concrete block, brick or wood framed. Preferences are usually shown towards single story facilities unless a drive-up access is provided.

Some banks are looking for your business if you are small, others are not. It would be good for you to look for institutions which have a program for mini storage building loans. They usually advertise that they are Small Business Administration lenders. Banks that are willing to give you a mini storage building loan usually rely on the credit history of the borrower. These programs are usually limited up to a maximum of $50,000 or $100.000.

You should not dismiss commercial lenders as a source of financing just because people say that you will be turned down. Prepare a good business plan and take it to an institution with an advertised small business program and see what happens. If you get turned down, it will probably cost you nothing. If you do get turned down, find out why and see if you can provide the needed items. Getting turned down for a mini storage building loan at one institution does not mean that you will get turned down at the next one.

Most lenders do not lend based on the value of the collateral that you can pledge. If your business does not have a sufficient cash flow to repay the debt, it doesn’t matter that your collateral is worth twice as much since you are not going to be able to pay the loan back.

Requirements for a small business package vary from bank to bank. Requirements for a mini storage building loan will usually require the following information. You will need to complete a loan application where you will put down your request, your desired terms, your business information and your personal information. They usually want three years of basic financial statements comprised of a balance sheet and an income statement. You will also have to provide three years of corporate tax returns. Banks usually require that the borrower guarantee 20% of the loan.

Be sure to obtain the financial situation of the building for which you are seeking a mini storage building loan. How much rent is being generated each month? This will become the basis for the loan. This information will be analyzed in order to make overall statements to the lender. These statements include a net cash flow, loan to value and a debt service coverage ratio.

The lender will order that various events take place. There will be an appraisal, a title search and a credit search. Once everything is finished, the terms of the mini storage building loan are issued and a closing date is set.