SBA 7(a) Self Storage Feasibility Study

A self storage record shaped by its lenders

The 7(a) program approved 1,584 self storage loans from FY2017 to FY2026, $2.31 billion in gross dollars. The record is shaped by its lenders. Live Oak Banking Company alone is the current holder of 620 storage loans worth $1.27 billion, and Bank Five Nine is next with 261 loans and $297.2 million. Below them the table drops sharply: The Huntington National Bank holds 34, Mountain America FCU 20 and Enterprise Bank & Trust 16.

Size and outcomes

The median loan is $975,000, and the middle half runs from $450,375 to $2.0 million. Franchised facilities account for 6.8% of loans. The cancellation floor for storage approvals of FY2017 through FY2024 is 11.1%, and the ceiling sits close by at 11.4%. Funded loans have performed. Charge-offs stand at a 0.50% floor across 806 storage loans funded in FY2017 to FY2021, and 0.12% went bad inside five years. The median of $975,000 is the reference for sizing a request. Texas leads the states with 185 loans, then North Carolina with 116, Florida with 80, California with 74 and Georgia with 71, so a study outside those states has fewer local comparables in this record. Approvals peaked in FY2021 at 296 loans and $420.9 million, against 172 loans and $287.0 million in FY2017 and 109 loans and $195.9 million in FY2026.

Testing a 7(a) storage facility

When a 7(a) storage loan buys or expands a facility that already operates, a feasibility study starts from its history: occupancy by unit size, street rates against in-place rents, concessions and delinquency. A new or larger facility needs storage demand proven from the trade area and supply tested, including facilities already permitted. Costs need checking against bids for buildings, climate control, paving and security systems. Coverage should hold at a higher floating rate and at an occupancy below the facility's best year. The appraisal should rest on income capitalization, so the study must show that the rent and occupancy behind it are achievable, and where the loan carries any business value, it should be separated from the real estate. SBA's codes do not split RV and boat storage from self storage, so outdoor vehicle yards are counted in these figures as well.