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SBA 7A for Construction

Posted: 7/26/2018
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Are you thinking of building a new self storage facility? The construction process on such a facility can be expensive and, at times, a bit stressful. By using the SBA 7A product, a borrower can finance up to three years of loan payments into the loan amount, relieving the stress of the lease-up period after construction.

An SBA 7A loan allows for interest only periods during the construction process with no renewal from the construction loan to the term loan. This feature allows for an interest reserve and interest only payment period throughout the construction process and the lease-up period. What exactly does this mean? It means your facility can be built and begin to generate cash flow before any payments will need to be made.

With down payments as low as 10% of the total project cost, an SBA 7A loan allows the owner to keep a lot of cash out of the property and keep reserves for future expansion or unforeseen expenses. These two pieces combined allow for a smooth transition into the new facility, mitigating a good portion of the start-up/lease-up issues found with more conventional loans.

With the SBA 7A, all of the construction costs, land purchase, fees and other soft costs can be rolled into the project. This means you can finance any marketing, permits and any other fees associated with the construction of the facility into the loan and repay it over time. The loan is then approved for a 25 - 27 year term with a short three-year prepayment period, ensuring your peace of mind that the funding will remain intact throughout the life of the loan.

For more information on SBA 7A loans or storage facility lending in general, please visit FBFCWI.com/Storage.

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