SBA 504 Cold Storage Feasibility Study

Few 504 cold storage loans, and large ones

Cold storage is among the smallest classes in SBA's 504 record: 39 loans approved over FY2017 to FY2026, worth $102.3 million. Size is what sets it apart. The median 504 cold storage loan is $2.1 million, well above the cold storage median across both SBA programs, and it stands just as clearly apart from the median of every 504 class combined. Half of these refrigerated warehouse loans fall between $1.2 million and $4.9 million, a band that reflects how much insulated, refrigerated space costs to buy or build. None of the loans went to a franchise; the share is 0.00%.

Settled cancellations, withheld losses

Cold storage approvals dated FY2017 to FY2024 have a cancellation floor and ceiling of the same 15.2%, which means no approval from those years was still waiting to disburse when the data was cut: that figure is settled. The charge-off rate is a different matter. Fewer than 30 refrigerated storage loans funded in the cohort window, so Loan Analytics' own presentation rule withholds the rate, and this page gives no loss figure; none should be inferred from its absence. WBD, Inc. leads the cold storage lenders with 7 loans worth $17.1 million. Massachusetts and Wisconsin have 7 loans each, Texas 6, California 4 and Virginia 3. Volume is lumpy: 7 loans and $19.8 million in FY2017, 7 and $22.5 million in FY2021, 5 and $18.4 million in FY2025.

What a cold storage study must carry

With so few loans behind it, a 504 cold storage deal leans heavily on its feasibility study. Demand has to be shown from named users: the food processors, distributors and growers who need frozen or chilled space nearby, whether they will sign leases or throughput contracts, and how seasonal their volumes are. Cost has to cover insulated panels, refrigeration plant, floors built to resist frost heave, dock equipment, backup power and the utility service a refrigerated building draws. Coverage on the bank loan and CDC debenture should be tested with energy at a higher price and the facility less than full, since power is the operating cost that moves most. The appraisal will find few comparable sales and may lean on replacement cost, so the study should show what the building would earn as ordinary warehouse space if the refrigeration were never used, the figure a lender falls back on. No coding caveat applies to the cold storage class on this page.