If someone doesn’t have experience with an RV park, they might not know how much capital it can take to run one. There’s land, maintenance, and lots more. If you’re looking to buy an RV park, or finance the one that you currently own, you’ll find lots of options for business loans for RV parks. Some are flexible, and some have very specific uses—but no matter what you’re looking to pay for, you should be able to find a match for you.
We’ll review the best options for business loans for RV parks with the specific needs of RV park-proprietors in mind. Then, we’ll review what makes a business loan a good fit for you, plus the basics for what you need to apply. By the end, you’ll have a sense of which RV park business loan should be top of your list and how to start the application process if you’re ready to move forward.
The first place you might look for a business loan for an RV park is a bank. That’s especially the case if you’re looking to finance land or real estate, since banks often give preferable rates. If you’re hoping to find financing for a big purchase such as commercial real estate, you can and should try to see what your local bank is looking for in a borrower.
Realistically, however, many borrowers who are looking for business loans for RV parks—or any kind of business loans—don’t qualify for a traditional bank loan. That’s because banks don’t lend to many borrowers, especially since the 2008 financial crisis, so only the absolute most qualified borrowers with lots of existing experience in business, very strong credit, and a strong financial track record generally qualify. In fact, only about 27% of small businesses find funding from banks.
That’s why it’s important to know the whole landscape for business loans when you’re looking to finance your RV park. Hopefully, you’ll feel good knowing banks aren’t the only option.
The hands-down best option if you’re looking to finance commercial real estate, including land, is an SBA 504/CDC loan. These loans are specifically meant to finance fixed assets as opposed to being deployed as working capital. And, they come with the best interest rates, longest repayment periods, and highest capital amounts to boot.
What’s the catch? No catch, exactly, but these loans are highly desirable because of those great terms, which means that they’re competitive to get. There’s technically no credit score requirement for SBA loans, but, historically, those who get approved for them generally have good to great credit, at least a few years in business, and history generating revenue (profitability not required, though).
SBA loans in general are furnished by banks but guaranteed by the U.S. Small Business Administration. This means that if a borrower defaults, the bank only stands to lose the small portion (15% to 25%) of the loan that isn’t guaranteed. That lowers their risk, which means they can offer those good terms to you. And for you, that means a lot of paperwork since these loans have many different layers—don’t expect a quick SBA loan application process, and expect to wait a few months before you have capital in hand. (If you can wait, though, it’s worth it.)
It’s also worth mentioning the SBA 7(a) loan. This, the most popular SBA loan program, can also be used for real estate and land, but you don’t have to solely finance a fixed asset with this loan. You’ll find the biggest savings on loan terms on SBA 504/CDC loans, but if you think you can qualify for an SBA loan, you’ll want to take a look into both programs to make sure you find the one that best fits your business.
You might not be able to qualify for an SBA loan, but like the idea of a lump-sum loan with which you can finance different expenses, including land. In that case, you’ll want to look into business term loans.
These loans are what you think of as “traditional” business loans in that you work with a lender to get approved for a certain amount of capital, which then gets deposited into your business bank account to spend at your discretion. These can be helpful business loans for RV parks, since you’re able to accomplish lots of different goals.
You can expect terms of about three to five years for repayment. These loans do have higher interest rates than SBA loans, but the tradeoff is that they’re accessible to a much wider range of borrowers, including those who wouldn’t qualify for SBA loans. They’re also much faster to fund, with approval possible in just a couple of days.
There can be lots of equipment and gear that you need to finance in your RV park. That could be something as small as the computer system with which you check people in, or as large as the sewer hookups you provide to your guests. If you’re looking for an RV park business loan to pay for a specific piece of equipment, you might want to consider equipment financing.
This type of loan enables you to bring a quote for equipment to a lender, who may offer to lend you up to 100% of the purchase price. This type of loan is especially good for newer businesses or those with less-than-great credit, since the piece of equipment you’ll be financing serves as collateral for the loan itself. Generally, this also means that you don’t have to provide any additional collateral.
If you’re a good candidate, you can generally get approval for equipment financing in just a couple of days. That’s especially great news if you have an emergency with equipment and need to quickly replace it.
Cash flow crunches happen to nearly every kind of business, especially for seasonal businesses such as RV parks. For lots of different expenses, including overhead, payroll, and more, a business line of credit can be a huge help.
This type of flexible business loan gives you access to working capital as you need it. You work with a lender to get approval for a credit line against which you can “draw,” accessing as much money from that credit line as you need at a given time. The biggest bonus is that you only pay interest on what you use. And, once you’ve repaid the amount you’ve withdrawn, you often have access to the full capital amount again.
These business loans are great for businesses in their early days, as some companies with only about six months of business history can get approval. And, with diligent repayment, they’re also a great way to build your business credit. Business lines of credit can also be extremely fast to financing, with minimal paperwork required.
Now that you’ve seen some of the best options for business loans for RV parks, how do you know which is best for your specific needs? Here are a few things to keep in mind as you select the business loan to apply for.
First, understand what you’re looking for in an RV park business loan. Ask yourself:
Questions such as these will help steer you toward the right business loan for your RV park as you rule out loans whose use cases and parameters don’t fit exactly what you need in your business financing.
We’ve alluded to it as we’ve spoken about different types of loans, but it’s important to know how much your financial history plays into which loans you are and are not eligible for. Some loans, like SBA loans, will be out of reach for those with less-than-great financial track records. Others are open to those with less or weaker history.
The main factors that lenders will evaluate are:
An important thing to note additionally is that you’re not going to be automatically disqualified for a business loan if you don’t meet posted minimum requirements. You might get approval because of other factors—but know that you probably won’t get the premium rates that other business owners with stronger financials would.
Once you feel that you’re ready to go forward with a business loan application, you’ll want to get a jump start on pulling out the common documents that lenders request. You’ll find that each lender has specific requirements depending on whom you work with, but you can set yourself up for faster approval by having the following on hand:
A note on applying as a seasonal business: Although it might seem to make sense that you should apply for a business loan once you hit your low season, the truth is that—in order to be the best candidate for a business loan—you want to apply at the tail end of your high season. That’s because lenders look at your business bank account balances to evaluate your candidacy, and you want to be able to show them the months during which you’re the most flush with cash.
To find the best RV park business loan, you’ll need to have a good sense of your own financials as well as what you’re hoping to do with the capital. With these two pieces, you should be able to home in on the type of business loan that’s right for you, and then work with a lender to get a decision. Remember: If you don’t qualify for the exact type of business loan you want now, you can always refinance down the line with stronger credit and revenue numbers.