SBA 7(a) Self Storage Feasibility Study in Colorado

Big checks and one dominant financier

Self storage in Colorado draws large SBA 7(a) loans, and one bank supplies the biggest block of them. Live Oak Banking Company leads the holders on 16 loans worth $33.3 million, with Bank Five Nine next at 5 loans and $11.1 million, within a cell of 39 approvals totaling $69.8 million between FY2017 and FY2026. A median of $1.1 million sits at 1.08x against self storage elsewhere, and the central half runs from $582,500 to $2.4 million, which is high enough that these are mostly new facilities or acquisitions of established ones, not fit-outs.

Position and place

In national count Colorado holds 15, while self storage takes 19 of 39 within Colorado asset types, so it is a mid-table borrower at home. Franchise brands appear in 17.9% of the loans. The county list is spread thin: Weld has 5, Arapahoe and Larimer each have 4, and Denver, Douglas, Eagle and El Paso have 3 each. Annual lending was heaviest at the start, with 5 loans and $14.9 million in FY2017 and 7 and $10.7 million in FY2018, and thinner since, down to 1 loan and $2.4 million in FY2023.

Outcomes and scope

Cancellation holds at 8.8% of the earlier approvals, unchanged by undisbursed loans, a low figure. A charge-off rate does not print, as Colorado's early funded loans are too few, and the gap is not a zero. The code does not separate RV and boat storage from ordinary self storage, which means a vehicle-storage project sits inside the same numbers.

What the study must establish

The central test for a Colorado storage facility is supply against demand within a short drive: existing square footage per household, occupancy at neighboring facilities, and rents for each unit size. The study should model lease-up, since a new facility fills over many months and the debt is paid in the meantime, and should price climate control, security and the proportion of drive-up units. Land cost, grading and utility connections can dominate a project, and altitude and snow loads affect construction. Since the $1.1 million median is a large ticket, expect a valuation on stabilized income and a lender's request for a lease-up reserve. The study should therefore show debt service coverage at moderate occupancy, and again at full occupancy, and should state the fee income from tenant insurance, truck rentals and retail sales separately from rent, because lenders view these ancillary streams with more caution than the unit rents themselves.