What interest rates do self storage loans have?
Self storage loan interest rates typically run prime plus 1.5 to 2.5 percent at banks, a fixed rate near that same range for the CDC portion of SBA 504 over 20 to 25 years, and 8 to 12 percent interest-only for bridge loans financing lease-up or conversion projects. Occupancy history, whether you operate the facility, and local market competition are the main factors that move the rate within each range.
Typical pricing by source
| Source | Typical rate | Term |
|---|---|---|
| Bank, stabilized facility | Prime plus 1.5 to 2.5 percent, often variable | 5 to 10 year fixed period, 20 to 25 year amortization |
| SBA 504, owner-operated | Bank rate on the interim loan; CDC portion fixed for 20 or 25 years | Long-term fixed on the CDC piece |
| SBA 7(a), owner-operated | Usually variable, prime plus a margin | Up to 25 years |
| Agency or CMBS, larger stabilized facilities | Treasury plus roughly 1.5 to 2.5 points | 5 to 30 years |
| Bridge, lease-up or conversion | 9 to 12 percent, interest only | 12 to 36 months |
Ranges vary by lender and market.
What moves the rate
Occupancy. A facility at 85 percent or higher physical occupancy sustained for 6 to 12 months prices better than one still stabilizing.
Ownership structure. Owner-operators accessing SBA typically get better long-term pricing than passive owners limited to bank or bridge financing.
Market competition. Markets with heavy new storage supply see lenders price in more caution, raising rates or lowering leverage.
Leverage. A loan at 60 percent of value prices lower than one at 80 percent.
Facility size and age. Larger, newer, climate-controlled facilities often price slightly better than small, older, non-climate-controlled ones.
Why bridge rates are higher
A facility in lease-up or mid-conversion produces uncertain income, so bridge lenders price the added risk into the rate, expecting the facility to season into permanent bank or SBA financing once occupancy stabilizes, typically within 24 to 36 months.
The SBA 504 fixed-rate advantage
As with other 504 projects, the CDC second mortgage locks a fixed rate for 20 or 25 years once the debenture funds, which is often the cheapest long-term money available for an owner-operated storage facility, compared to a variable bank rate alone.
A worked example
$2 million stabilized facility, owner-operated, financed under SBA 504: bank first mortgage of $1 million at roughly prime plus 2 percent, CDC second of $800,000 fixed near 6.5 to 7 percent for 25 years, borrower's $200,000 down. Compare to a passive-owner bank loan on the same facility at prime plus 2.5 percent variable across the full amount, with no long-term fixed protection.
How CommFi handles it
Our lending desk prices bank, SBA, agency, and bridge options side by side based on your ownership structure and the facility's stabilization. It funds direct when it fits, and when the desk searches a database of 7,000+ lenders, the ones active in self storage in your market compete on rate. Zero upfront fees.
Related reading
Related questions
- What interest rate does a self storage loan have?
- Typically prime plus 1.5 to 2.5 percent at banks, a fixed rate on the SBA 504 CDC portion, and 8 to 12 percent for bridge loans during lease-up.
- Does operating the facility myself get a better rate?
- Often, yes, since it opens SBA 504 financing with a long-term fixed rate on the CDC portion, typically cheaper than a variable bank rate alone.
- Why are bridge loan rates on storage higher?
- Because the facility is still stabilizing and produces uncertain income, so the lender prices the added risk into the rate.
- Does occupancy affect my storage loan rate?
- Yes. Facilities with sustained occupancy of 85 percent or higher typically price better than those still in lease-up.
- Is SBA 504 the cheapest long-term rate for storage?
- Often, yes, for owner-operators, because the CDC second mortgage locks a fixed rate for 20 or 25 years.
Property developer and licensed appraiser. 22+ years in real estate: TIC conversions, multi-unit redevelopments, mixed-use, fix and flips, commercial DSCR.