Helpful information about SBA loans for RV Parks, Campgrounds, and Glamping Grounds
By: Tricia Hoffman (Senior Vice President – Business Development Officer at Gulf Coast Small Business Lending)
Recreational vehicles, camping, and glamping comprise a unique, carefree lifestyle and an ever growing popular pastime for many Americans. As a result, there has been considerable growth in the industry in recent years. If you already own an RV park, campground, or glamping facility or if you are interested in start-up or buying one, this a great time to do so! As you can imagine, it is not always easy or even ideal for your business to fund acquisitions, start-ups, improvements or expansions out of pocket. This article provides information regarding SBA financing for these types of projects.
If you are contemplating the purchase (also known as an acquisition), start-up, expansion, or improvement of an RV park, campground, or glamping facility you should definitely consider an SBA loan to finance your project. I have actively financed projects in this unique industry over the last several years so I thought it might be helpful to share some of the details that most borrowers find useful as they are starting the process of securing financing, specifically an SBA loan. Often when I speak with a prospective borrower, they are surprised to learn that an SBA loan is an excellent option for their financing needs. Let’s look at why that is the case!
First, SBA loans come with terrific terms for small business owners which makes them very appealing if only for this reason. SBA loans require less money down and allow for longer repayment terms than conventional commercial loans. Nearly every borrower will benefit from those two features alone; however, those are not the only benefits!
SBA loans can be used for any or all of the following purposes (and often multiple purposes are combined into one loan!):
- Purchase land to construct new facilities;
- Improve existing RV parks, campgrounds, or glamping facilities;
- Invest in machinery, furniture, technology, or supplies to better accommodate guests/campers;
- Acquire existing RV parks, campgrounds, or glamping facilities;
- Refinance business debt;
- Partner buyouts.
SBA loans for RV parks, campgrounds, and glamping facilities are available nationwide through the SBA 7(a) loan program in amounts up to $5,000,000. The loan term is determined based on the use of SBA loan proceeds but follows these guidelines: up to 7 years for working capital (this might include closing costs, or other “soft costs” associated with the loan or project), up to 10 years for equipment, and up to 25 years for real estate. SBA loans are fully amortizing which means that there is no balloon payment, review, or renewal required during the term of the loan. Your loan will be fully paid off at the end of the loan term (assuming you have made all required monthly payments on schedule). Longer amortization terms can be especially beneficial for small business owners, as they allow the business to spread the cost of their financing package over a longer period of time which, in turn, makes it more affordable.
In most instances, borrowers will be required to invest their own cash resources in an amount equivalent to at least 10% of the total contemplated project costs. Interest rates are based off of the Prime lending rate and are competitive but will sometimes vary slightly from lender to lender. Note that all SBA loans require a personal guarantee from the business owner(s), and this is a regulatory requirement that SBA lenders are not able to waive.
Often a portion of the financing package is provided by the seller in business acquisition transactions and we are accustomed to including this as part of the loan structure – just let us know on the front end if seller financing is an option in your situation.
Also, I always recommend that you work with an SBA Preferred Lender (like Gulf Coast Small Business Lending) because SBA Preferred Lenders are the most experienced and also have delegated approval authority on behalf of the SBA. This considerably shortens the timeline to complete the SBA loan process.
Please note that SBA loan programs are not available for mobile home parks or properties where the majority of revenues result from long-term residents.
In order to apply for an SBA loan, you will need to submit complete documentation about your business (or the business you are buying), the business owners, along with an application. Documentation includes both personal and business tax returns (for 3 years), personal finance statements, business debt schedules, and perhaps other information unique to your situation. I always recommend that you speak with me first so I can provide customized and detailed guidance.
At Gulf Coast Small Business Lending we understand that each borrower, business need, and loan request is unique. Our professional team of highly experienced SBA lenders understands the RV park, campground, and glamping industries. We encourage you to speak with a Gulf Coast Small Business Lending representative to discuss your project as well as any other requirements for your specific situation.
If interested, you can find additional information about many of the industries and loan purposes offered by Gulf Coast Small Business Lending by visiting the SBA Loans section of our website.
Lastly, many other frequently asked questions are addressed on our website here: https://gulfcoastsba.com/faqs/.
Tricia Hoffman has been actively involved in SBA lending for over 20 years serving as both a Business Development Officer and Portfolio Manager during her career. Tricia graduated with a degree in Economics and Accounting from the University of Tampa. After graduation, Tricia worked as a commercial real estate loan officer, special assets manager, and private banker in the Tampa Bay area. In 1998 she joined with national SBA lender and began working with small business clients throughout the U.S. Since 1998 Tricia has provided financing for hundreds of borrowers across many industries. When not originating SBA loans you can often find Tricia on the golf course, on the beach, or out for a hike.
Products and services offered by Gulf Coast Small Business Lending, a division of Gulf Coast Bank & Trust Co. Nothing herein shall be construed as a commitment to lend. All loans are subject to credit and collateral approval. Additional terms, restrictions and limitations may apply. Loans are only available to U.S. citizens and residents. Member FDIC – Equal Housing Lender.