News You Can Use September 2019
Issue # 28
Storage Authority® News
Welcome, and congratulations to Frank and Mercedes, brand new franchise owners from FL. This is our fourth Florida location.
Mulberry Florida is open STORAGE AUTHORITY MULBERRY FLORIDA
Land O’ Lakes, FL site plans are approved and construction is imminent.
New Franchise owner Betty K of Northport FL just put in her first land offer.
Storage Authority will be at The Great American Franchise Expo in Tampa, FL, October 26 & 27. Come by and say hello at booth 216!
Here are a couple of photos of our Storage Authority Monmouth Rd, NJ facility slated to open around the end of October.
A nice brick facade and huge office windows are going to provide a wonderful street view to attract tenants!
You could be next!. We have the road map ready to go for you.
As part of our Dynamic Ease Self Storage Development Series, we help our franchisees around the development landmines, including finding land, designing, obtaining approvals, financing and building a premier self-storage facility.
Should I use an SBA loan for my new Self Storage construction project?
It depends, but if you do not have the 25 to 35 percent cash equity to go toward the project (down payment) that most traditional lenders require there may be limited other options. SBA lenders typically require 10 – 15% cash equity and can loan up to $5,000,000 for an SBA 7a loan
For a single-story 2 phase project, you can often get your facility built with $500K equity +_. vs over $1.5 MM equity investment required for many traditional lenders
If I have the equity required by a for a typical bank loan should I consider an SBA loan?
You still may want to consider an SBA loan for a couple of reasons as follows:
1) SBA loans allow you to borrow soft costs and carrying costs which many traditional lenders do not. So even if you have the equity for the loan you will need additional funds for design, soft costs and carrying costs until the facility breaks even if you go with a traditional loan.
2) Most commercial loans are typically for either 5 or 10 years. SBA loans can be up to 25 years allowing you to lock in the current low-interest rates.
3) If you may need your funds for other reasons, the reduced SBA equity requirements will allow you to keep more of your cash equity.
If I get an SBA loan can I use a management company to operate my facility?
Generally, SBA loans are for owner-operated facilities. To ensure this is the case the SBA has recently made several new requirements for Self Storage SBA loans. One major one that restricts some management companies (and the value of having a management company) is that owners must be responsible for the facility employees.
Inside Self Storage put out a great article last year highlighting How Recent Changes to SBA Loan Requirements May Affect Self-Storage Borrowers Under the new rules, SBA borrowers must:
Approve the annual operating budget
Approve any capital expenditures or operating expenses over a significant dollar threshold
Have control over the bank accounts
Have oversight over the employees operating the business (who must be employees of the applicant business)
The last clause is italicized because it’s the most subtle and important point for self-storage owners using third-party managers. When the SBA says staff must be employees of the applicant business, it’s referring to the borrower. In other words, facility staff cannot be employees of the management company.
Storage Authority Franchise owners do qualify for SBA loans. Storage Authority is listed on the SBA Registry.
Are all SBA lenders the same?
No! Just like all lenders are not the same. SBA preferred lenders do not have to submit the SBA loan for an SBA review and approval. When a non-preferred lender has to send a loan into the SBA for approval it can take extra time and even lead to changes to the terms of the loan.
While certain items are required for SBA loans every SBA lender does have a lot of terms that they determine and can be flexible on. That is why it is good to work with a preferred SBA lender that understands self-storage loans and your team.
Do You Have a Self Storage Question?
Storage Authority Vendor Updates
We chose Open Tech Alliance for our security and gates systems, call center, online auction partner, kiosks because they integrate with each other and our Sitelink Management software.
But it did not take us long to appreciate how they are regularly improving and adding to their products and services. Their latest integration with Davnici Locks is going to save our managers a lot of time and headaches with delinquent tenants. And soon I believe they will make after hour rentals so much easier and much cheaper considering a Davinci Lock is $10 and an individual door lock system is closer to $200 a unit.
See the full press release here: OpenTech Adds Overlock Solution to INSOMNIACTMCIA Access Control
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Things we love to do besides self-storage.
We love a good sunset. We are very fortunate we get to follow the sun.
Picture 1 – Lido Beach FL – No better place in the wintertime Picture 2 – Boating sunset on Coventry Lake ( Coventry CT) Picture 3 – Sunrise on GP’s brothers Lobster boat. Way to early to get up! Picture 4 – The view from our summer camping in Caraquet, NB, Canada Picture 5 -We love the beach so much we got married on the beach!
What would you do with more time & money?
What’s holding you back? You can do it! You deserve it!
“Half of what separates the successful entrepreneurs from the non-successful ones is pure perseverance.” Steve Jobs
ARE YOU READY?
Storage Authority Blogs You Will Enjoy!
Recent Storage Authority News Letters August 2019 – Self Storage – Where is the best place to build?
Storage Authority Video of the Month
Storage Authority Demonstrates Alexa Gate Control
Ready to get ahead with the two best number one Self Storage Development and Marketing books?
Check out www.SelfStorageMarketing101.com
Storage Authority 677 N Washington Blvd. Sarasota FL 34236
Garrett Byrd Storage Authority Vice President of Franchise Development
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