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Welcome to the latest episode of the Investor Financing Podcast! In this session, we delve into a crucial question asked by Steve regarding the acquisition and expansion of an RV park using SBA loans. If you're considering a similar venture, you'll find this information invaluable.
Steve's Inquiry
Steve, an aspiring RV park owner, reached out with a pertinent query. He's eyeing the purchase of an RV park with 30 existing pads and an enticing opportunity for growth—five undeveloped acres that could accommodate at least 30 more pads. Steve's question was straightforward: “Could I find financing for the acquisition of the property and for the addition of the extra 30 pads?”
SBA 7A Loans: The Financing Solution
Beau, the host of the podcast, provided an encouraging response. He suggested that Steve's project aligns well with the potential of an SBA 7A loan, which covers both property acquisition and construction costs. This type of loan offers a pathway for entrepreneurs like Steve to realize their RV park dreams.
Structuring the Deal
To secure this financing, Beau emphasized the importance of proper structuring. Steve would need to ensure that all elements of the project are well-prepared, including:
- Construction Plans: Having bids and a General Contractor (GC) ready is crucial. Being “shovel-ready” for infrastructure work is a key aspect of the process.
- Infrastructure Work: Preparing the pads involves groundwork. This might not necessarily mean pouring concrete, as a gravel pad could be suitable depending on specific circumstances.
- Financial Documents: Beau mentioned that the seller's cooperation is vital. Steve should request three years of tax returns from the seller, along with year-to-date interim statements.
Projections and Funding
Beau stressed that for SBA loan approval, having a comprehensive financial plan is essential. Steve would need to provide:
- Pro Forma: This document should outline three years of financial projections. The first year should have a month-by-month breakdown, while the subsequent two years provide annual estimates.
- Funding Needs: These projections can encompass various financial aspects, such as cash flow and projection-based estimates. The loan can potentially cover construction costs, Furniture, Fixtures, and Equipment (FF&E), and even working capital for employee salaries, if required.
Value-Add Potential
Beau highlighted the attractiveness of such projects. When buying an existing RV park with untapped potential, there's substantial value to be added. Additional acreage and upgraded facilities can significantly boost the park's profitability.
Taking the Next Step
For individuals like Steve who aspire to embark on such ventures, Beau encouraged them to explore their financing options further. You can connect with experts like Beau by booking a consultation to discuss your specific project details.
In conclusion, this podcast session sheds light on the possibilities of acquiring and expanding an RV park with SBA loans. With proper planning, financial projections, and a well-structured approach, realizing your dream of owning an RV park with 60 pads is certainly within reach.
Thank you for joining us in this episode of the Investor Financing Podcast, where we provide insights into the world of financing and lending. Stay tuned for more informative content from Beau, who brings over two decades of lending experience to the table.