Do you need funds to run your RV park business but you don’t know where to get or apply for such? If YES, here are 4 best sources of financing for RV Parks.

There is growing consumer demand for RVs, and RV park owners are listening. Fueled by the industry’s renewed popularity, RV parks across the country are expanding their current facilities to make way for digital nomads, young families and retired travelers who are taking their home to the road. But it is not always easy—or best for your business—to fund those expansions out of pocket.

RV park businesses have many options for long-term growth: buying new property, expanding current facilities, refinancing, providing upgraded technology for your campers, and more. For many businesses, using existing funds to pay for key expansions can actually hinder growth.

If you are looking to grow but preserve capital in the process, it is time to explore financing for your RV Park. Reports have it that over 49 percent of small businesses borrow money to boost working capital and 42 percent are borrowing to purchase new equipment.

Overall, trends show that small businesses are borrowing to expand their business, rather than simply to repay debt. But just because others are doing it doesn’t mean it is right for you. It is advisable you check yourself and your business needs before going down this lane.

As you explore different financing options for your RV Park, consider how each loan will impact your business in the next 5, 10 or 20 years. The best loan for your business will help sustain long-term growth; the best lender for your business will adjust the terms of your loan for optimal long-term benefits.

Types of Financing for RV Parks

To most people, the first place to look for a business loan for an RV park is a bank. That is especially the case if you are looking to finance land or real estate, since banks often give preferable rates. But if you are looking 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.

It is necessary to note that 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 is 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 percent of small businesses find funding from banks. That is why it is important to know the whole landscape for business loans when you are looking to finance your RV park. Hopefully, you will feel good knowing banks aren’t the only option. There’re varieties of commercial loans and financing options for businesses of all sizes. Here’s a quick overview of key types of financing for RV parks…

  1. SBA 504/CDC Loans

If you are looking to finance commercial real estate, including land for your park, your best option will be an SBA 504/CDC loan. These loans are specifically meant to finance fixed assets as opposed to being deployed as working capital.

And, these loans come with the best interest rates, longest repayment periods, and highest capital amounts to boot. These loans are highly desirable because of those great terms, which means that they are competitive to get.

There is technically no credit score requirement for SBA loans, but, historically, those who get approved for them generally have good to great credit, have been at least a few years in business, and have a history of generating revenue (profitability not required, though).

Note that SBA loans are generally 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 percent to 25 percent) of the loan that isn’t guaranteed.

That lowers their risk, which means they can offer those good terms to you. Howbeit, it requires a lot of paperwork since these loans have many different layers—don’t expect a quick SBA loan application process, just expect to wait a few months before you have capital in hand.

Also note that the SBA 7(a) loan is the most popular SBA loan program, and can be used for real estate and land, but you don’t have to solely finance a fixed asset with this loan. You will find the biggest savings on loan terms on SBA 504/CDC loans, but if you think you can qualify for an SBA loan, you will want to take a look into both programs to make sure you find the one that best fits your business.

  1. Business Term Loans

Even if you fail to qualify for an SBA loan, you might prefer the idea of a lump-sum loan with which you can finance different expenses, including land. In that case, you will want to look into business term loans. These loans are what you think of as “traditional” business loans because 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 are able to accomplish lots of different goals. These loans tend to come with 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 are accessible to a much wider range of borrowers, including those who wouldn’t qualify for SBA loans. They are also much faster to fund, with approval possible in just a couple of days.

  1. Business Line of Credit

According to reports, cash flow crunches hits 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.

Note that this 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 have repaid the amount you have 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 are also a great way to build your business credit.

  1. Equipment Financing

Indeed there are lots of equipment and gear you need to finance in your RV park. It could be the computer system with which you check people in, or the sewer hookups you provide to your guests. If you are 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 percent 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 will 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 are a good candidate, you can generally get approval for equipment financing in just a couple of days. That is especially great news if you have an emergency with equipment and need to quickly replace it.

Conclusion

To locate the best RV park business loan, you will need to have a good sense of your own financials as well as what you are hoping to do with the capital. With these two pieces, you should be able to know the type of business loan that is 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. Once your loan has been funded, it is time to use the money for your intended business purpose.

With careful planning, these funds have the potential to take your park to the next level. The final step is to remember to always pay your loan as agreed like any responsible borrower. This proves that you are a trustworthy business and opens up more lending opportunities for the future.