How to Use an SBA 7(a) Loan to Buy and Turn Around an Underperforming Self-Storage Facility

By Garrett Byrd

Storage Authority Franchise

What if the self-storage facility that fits your buy box is not perfect?

Maybe occupancy is low. Rents are below market. Marketing is weak. Technology is outdated. The property needs work. Or the current owner simply stopped doing the things necessary to maximize the facility's potential.

That does not necessarily make it a bad acquisition.

It may be the opportunity.

The challenge is financing both the acquisition and the turnaround.

That is where an SBA 7(a) loan can become an attractive tool for a qualified buyer.

Don't Just Buy the Facility. Buy the Upside

Many buyers look at a storage acquisition and ask:

"What is the current NOI?"

A better question is:

"What could this facility produce if it were operated correctly?"

A properly structured SBA 7(a) project can potentially finance eligible acquisition costs, real estate improvements, equipment and working capital within one financing structure, subject to SBA and lender requirements.

That can be powerful when buying a facility that needs capital immediately after closing.

Think about the difference between:

A 60% occupied facility with below-market rents, outdated systems and weak marketing

and

A 60% occupied facility with a realistic plan to improve operations, revenue, customer experience and occupancy.

The gap between those two facilities is where the opportunity lives.

What Needs to Change?

The strongest SBA turnaround story is not simply, "We think we can increase occupancy."

It is a specific plan.

Maybe the facility suffers from:

• Below-market rents

• Poor collections

• Weak sales conversion

• Excessive concessions

• Outdated technology

• Poor security

• Deferred maintenance

• Weak curb appeal

• Ineffective marketing

• An underperforming manager

  
  

Now build the plan around fixing those problems.

Operations

Implement a manager-driven operating system with clear expectations, accountability, procedures and ongoing support.

Sales

Improve lead response, follow-up, tours, objection handling and rental conversion.

Marketing

Don't simply spend more money on advertising. Build awareness throughout the facility's primary trade area. Storage Authority calls this Crush the Competition, with the goal of making your facility the storage choice people think of when they need storage.

Technology

Use automation to eliminate unnecessary work while allowing the manager to focus on customers, sales, and the community.

Customer Experience

This is where Storage Authority's philosophy is different.

The goal is a Ritz-Carlton experience, not a Motel 6 experience, combining high-tech systems with high-touch customer service.

Where the SBA 7(a) Can Help

Depending on the transaction and lender, an SBA 7(a) project may include eligible costs such as:

• Acquisition of the business and real estate

• Facility renovations

• Roof and asphalt improvements

• Gates and access control

• Security and lighting

• Digital locks

• Technology

• Office improvements

• Eligible equipment

• Marketing

• Working capital

  
  

The maximum 7(a) loan is generally $5 million.

But remember: 10-15% down does not mean 10-15% of the purchase price and nothing else.

The buyer still needs to satisfy SBA equity requirements, closing costs and other project requirements while maintaining enough liquidity to execute the turnaround.

The goal should not be to put the least amount of cash possible into the deal.

The goal is to have enough capital to successfully execute the plan.

This Is Where the Right Partner Matters

An SBA lender can help finance the project.

They are not going to operate the facility.

That is where partnering with an experienced self-storage organization can make a significant difference.

Storage Authority owns self-storage, manages self-storage and designs and builds self-storage. The team brings decades of combined self-storage and franchise experience and provides franchise owners with systems, training, technology, operations, sales and marketing support.

The philosophy is simple:

You are in business for yourself, but not by yourself.

Instead of buying an underperforming facility and spending years trying to reinvent the wheel, a Storage Authority franchise owner can apply proven systems and experience to the turnaround from day one.

That includes:

• Manager-driven operations

• Automation

• Sales scripts and training

• Marketing systems

• Customer-service standards

• Technology

• Local marketing and unconventional PR

• Ongoing guidance and support

  
  

What Makes a Great SBA Self-Storage Acquisition?

Look for problems that are fixable.

• Bad management, not a bad market.

• Below-market rents, not nonexistent demand.

• Weak marketing, not poor visibility.

• Poor sales execution, not an inability to attract customers.

• Deferred maintenance, not a fundamentally defective property.

• Outdated systems, not an obsolete business model.

  
  

The best opportunity is often the facility where there is a meaningful and realistic gap between current performance and potential performance.

The Bottom Line

An underperforming self-storage facility does not necessarily have to be a problem.

It can be an opportunity to create value.

An SBA 7(a) loan may provide a qualified buyer with a way to finance the acquisition and eligible improvements while preserving capital for the business.

But financing is only the beginning.

The real question is what you do after you get the keys.

1. Find the right facility.

2. Structure the financing correctly.

3. Identify what is holding the business back.

4. Fix the property.

5. Improve the operations.

6. Create the customer experience.

7. Own your three miles.

8. Grow the cash flow.

9. And don't try to do it alone.

When it comes to our Storage Authority owners, they are in business for themselves.

But not by themselves.

Join Us Live for our Upcoming Webinar:

Webinar Details

• Topic: You Found an Offline Facility that Fits Your Buy Box… Now What?

• Date: Thursday, September 17th

• Time: 11:00 AM EST

• Hosts: Garrett Byrd & Marc Goodin

• Register: Click here

Building or buying a self-storage business isn't about working harder; it’s about choosing a high-margin, semi-absentee model supported by industry veterans that can share the blueprint to success.

Take the First Step Today

• Ready to build or buy your own self-storage facility? Storage Authority provides the systems and support to help you build faster and smarter.

  
  

  📅 Schedule a 1-on-1 Discovery Call: Book Here

  📚 Get the Free Book: Email Garrett@StorageAuthority.com to claim your copy of "Is Self Storage the Right Investment for You?"