Short answer: Most people getting started use bank or SBA loans (7(a) or 504). Experienced sponsors with a track record, high-net-worth guarantors and a larger project may use private debt capital groups. Seller financing and bridge loans can also help close a gap.^[1]

The main options #

• SBA 7(a) and 504 loans. Often around 20% down at minimum, and more when debt coverage requires it. A benefit Mark values on development deals is access to interest reserves and negative cash-flow funding during lease-up.^[1]
• Traditional bank loans. Often 25–35% down on new construction or conversions, sometimes more for deals that don’t cash-flow enough early on.^[1]
• Private debt capital groups. Mark has used one on a large development. They typically expect a track record, high-net-worth sponsors and a sizable project.^[1]
• Seller financing or bridge capital to bridge part of the gap.^[1]

A note on SBA timing #

On one deal Mark learned that an SBA loan doesn’t have to close before rates move to keep its terms: once the lender submits a complete package and the SBA assigns a loan number, the loan doesn’t have to be re-underwritten if rates rise.^[2] Confirm how this applies to your loan with your lender.

Related answers #

• How much money do you need to get into self-storage today, and how does debt coverage affect it?
• Should you raise money for a self-storage deal from partners or investors?
• How does a self-storage syndication work?

Sources #

Each numbered note above links to the post of Mark’s it comes from.

1. How Much Money Do You Really Need to Start in Self-Storage?, Mark Helm, October 17, 2025
2. What the Jobs Report, CPI, and Bond Market May Be Telling Us About Interest Rates, Mark Helm, August 14, 2026