Self-storage construction loans fund ground-up pads, big-box conversions, pad expansions, and climate add-ons — then bridge into DSCR permanent debt at 5.75%–10.5% or SBA 504 takeout once units are paying. Jaken Finance Group prices qualified files at 8.99%–13.5% interest-only on 12–24 month terms with milestone draws and interest reserves built for lease-up.
This is the construction and value-add stack for storage — not stabilized acquisition (see self-storage facility financing) and not residential ground-up (see spec home construction). Storage construction underwrites on unit mix, $/sf, three-mile supply, and economic occupancy — not ARV on a house comp.
National rate benchmarks: self-storage loan rates benchmarks 2026. Program comparison: SBA vs bridge vs CMBS. Owner-operator path: SBA self-storage loans.
Call (833) 264-7776, pre-qualify, or submit a deal with plans, budget, and competitor map.
Project types we see on construction files
| Project | Typical basis driver | Construction note |
|---|---|---|
| Ground-up pad | Land + vertical $120–$180 / sf rentable | Site work, stormwater, entitlement |
| Big-box conversion | Building $40–$90 / sf + conversion | Change of use, HVAC, demising, sprinklers |
| Pad expansion | Incremental vertical on owned land | Faster CO if operator in place |
| Climate add-on | $45–$90 / sf converted area | Highest rent lift; longest draw schedule |
| Multi-story urban | High basis, high $/sf | Experienced operators; supply scrutiny |
Big-box conversion is the Sun Belt and Midwest default: empty anchor boxes with acreage, wide aisles, and a three-mile household ring. Ground-up is the collar-county and exurban play when land is entitled and the pipeline map is thin.
Construction loan terms (2026)
| Parameter | Jaken Finance Group band |
|---|---|
| Rate | 8.99%–13.5% interest-only |
| Term | 12–24 months |
| Leverage | 60%–70% LTC ground-up; 65%–75% conversion / expansion |
| Draws | Milestone inspections — site, vertical, doors, gate, office |
| Reserve | Interest reserve common on 18+ month lease-up |
| Exit | DSCR 5.75%–10.5%, bank, CMBS, or SBA 10%–15% down |
These match site-wide bridge parameters. Your term sheet sets LTC, points, and extension language after plans and budget review.
Ground-up sequence
- Land or assemblage — bridge initial close at 60%–70% LTC including soft costs.
- Vertical draws — steel, masonry, or tilt-up; unit doors and climate envelope phased.
- Certificate of occupancy — no legal rent without CO and gate operational.
- Lease-up — report economic occupancy monthly; promotions do not count as stabilized.
- Permanent takeout — DSCR when NOI clears 1.15–1.25+; SBA when owner-operator and occupancy rules are met.
Supply check before step one: Yardi Matrix and StorageCafe show metros like Phoenix (6.6% of stock under construction) and Orlando (5.1%) where new doors compete aggressively in 2026.
Big-box conversion sequence
- Acquisition bridge — purchase empty retail or flex at 65%–75% LTC.
- Conversion draws — roof, HVAC, demising, sprinklers, access control.
- Phased opening — drive-up wing first if climate envelope lags.
- Lease-up — 18–36 months typical; faster when hybrid product is first in ring.
- Refi — DSCR on occupied NOI or bridge now, SBA later for owner-operators.
Conversion basis looks cheap at $45 / sf until the roof quote arrives. Put roof, HVAC, and sprinkler in the holdback — not a 10% allowance.
Expansion on an operating facility
Operators with an existing store and entitled pad land often use expansion construction at 65%–75% LTC:
- Shared gate, office, and management — lower incremental opex
- Proven collections history — lender trusts operator
- Risk: cannibalization and rate compression if you add too many like units
Expansion still needs a pipeline map. A REIT delivering 40,000 sf three miles away during your fill month does not care that you already operate a profitable store.
Bridge to SBA 504 takeout
Owner-operators who will run the facility can use construction bridge now and SBA permanent later:
| Phase | Product | Terms |
|---|---|---|
| Build / lease-up | Construction bridge | 8.99%–13.5% IO, 12–24 months |
| Stabilization | SBA 504 or 7(a) | ~10%–15% down, long-term fixed or floating |
The bridge now, SBA later structure wins entitled land and vertical schedules SBA cannot hit in 30 days. Budget 12–18 months of bridge carry plus SBA processing — not a 90-day fantasy.
Full SBA storage guide: SBA self-storage loans.
Worked example — ground-up climate pad (composite)
Composite, not a live quote. Two-acre pad, 58,000 rentable sf, climate-forward mix. Land $820,000. Vertical + site $6,420,000. Soft $380,000. All-in $7,620,000.
| Stack | Amount |
|---|---|
| Construction loan 65% LTC | $4,953,000 at 10.75% IO |
| Sponsor equity | $2,667,000 |
| Interest reserve (15 months) | $795,000 in holdback |
Lease-up: month 6 41% economic; month 12 68%; month 20 83% at blended $1.28 / sf / month.
| Stabilized month-20 | Annual |
|---|---|
| Unit income at 83% economic | $741,000 |
| Ancillary | $44,000 |
| OpEx (37%) | $290,570 |
| NOI | $494,430 |
Value at 6.4% cap ≈ $7,725,000. DSCR takeout at 67% LTV ≈ $5,176,000 at 7.125% → retires most of construction debt if fill hits. Twenty months IO without reserve ≈ $887,000 — why reserves exist.
Worked example — big-box conversion (composite)
Former 98,000 sf anchor, 72,000 sf rentable after conversion. Purchase $2,100,000. Conversion $1,850,000. All-in $3,950,000.
| Item | Value |
|---|---|
| Bridge 70% LTC | $2,765,000 at 11.0% IO |
| Monthly IO | ~$25,345 |
| Month-14 economic occupancy | 79% |
| Stabilized NOI | $318,000 / yr |
| DSCR refi 68% LTV on $4.55M value | $3,094,000 at 7.25% |
Conversion wins on basis per door — loses if the roof and sprinkler bid was missing from day one.
File checklist
- Thesis: ground-up, conversion, or expansion
- Unit mix matrix — sizes, climate vs drive-up, count
- Construction budget with contractor bids — not allowances
- Three-mile existing + under construction facility list
- Entitlement / CO path from architect or expeditor
- Operator resume or third-party management agreement
- Lease-up pro forma with economic occupancy monthly
- Exit letter: DSCR, SBA, or sale to regional operator
- Interest reserve or liquidity for 18–24 months IO
Local market guides
- Phoenix self-storage loans
- Orlando self-storage loans
- Houston self-storage loans
- Dallas–Fort Worth self-storage loans
- Self-storage loans Chicago — conversion vs collar new-build
Entitlement and permitting — ground-up vs conversion
Construction debt from Jaken Finance Group closes on entitlement clarity, not broker optimism. Ground-up and conversion follow different municipal clocks — and mixing them on one budget is how sponsors run out of equity at draw seven.
Ground-up pad entitlement sequence
- Zoning confirmation — self-storage permitted by right or conditional use; if CUP, hearing date before land hard deposit.
- Site plan / plat — stormwater, utility, fire lane, and landscape per municipality; 60–120 days common in Collin, Maricopa, and Fort Bend counties.
- Building permit — architectural, structural, MEP; tilt-up or masonry submittals; 30–60 days after site approval.
- Utility will-serve — power for climate load often lags water/sewer; transformer upgrades are a $80K–$250K line item in Sun Belt files.
- Certificate of occupancy — final fire marshal, gate operational, office and security live; no legal rent until CO.
Greenfield pads in Harris County AE flood zones add elevation certification and engineered detention — lenders may cap LTC at 60% until FEMA documentation clears.
Big-box conversion entitlement sequence
- Change of use — confirm storage allowed in existing retail/flex zoning without full replat.
- Fire and life safety — sprinkler retrofit, egress, fire walls between demised climate halls; often the longest lead item.
- HVAC and envelope — roof recover or overlay before climate build-out; Phoenix and DFW files size for peak heat and hail exposure.
- Phased CO — some jurisdictions allow partial opening of drive-up wing while climate hall completes; verify with city before pro forma assumes split revenue.
- Signage and access — monument sign permits and left-turn access on arterial roads can delay grand opening even when building is done.
Conversion looks $40–$90 / sf cheap until the fire marshal marks up your sprinkler plan. Put roof, HVAC, and sprinkler as hard bids in the holdback — not 10% contingency.
Bridge-to-SBA 504 timeline — owner-operator calendar
Owner-operators who will run the facility often use construction bridge at 8.99%–13.5% IO, then SBA 504 permanent with ~10%–15% down. Jaken Finance Group structures both legs — but the calendar is 18–30 months, not “build and refi in six.”
| Month | Milestone | Product |
|---|---|---|
| 0 | Land or building hard contract; bridge term sheet | Bridge IO |
| 1 | Bridge close; initial draw on land or acquisition | Bridge IO |
| 2–8 | Vertical or conversion draws; entitlement if not pre-cleared | Bridge IO |
| 9 | CO; gate live; first paying tenants | Bridge IO |
| 10–12 | Economic occupancy 35%–50%; monthly reporting | Bridge IO |
| 13–18 | Occupancy 55%–75%; begin SBA pre-work if operator qualifies | Bridge IO + SBA prep |
| 16 | SBA 504 application submitted; CDC engagement | Bridge IO |
| 18–20 | Economic occupancy 78%–85%; trailing collections documented | Bridge IO |
| 20–24 | SBA approval and 504 funding; bridge payoff | SBA permanent |
| 24+ | Stabilization toward 88%+ physical; ancillary ramps | SBA permanent |
SBA prep during month 16 — not month 22 — avoids extension fees on bridge. Owner-operators need business tax returns, personal financial statement, management resume, and environmental on prior retail use before SBA credit opens.
Passive investors cannot ride this path — SBA requires owner-operation. Those sponsors exit to DSCR at 5.75%–10.5% with 25%–35% equity instead of 10%–15% SBA down.
Month-by-month lease-up — ground-up composite (58,000 sf)
This table extends the worked ground-up example above with operating detail underwriters request on construction files:
| Month | Economic occ. | Collected rent (mo) | OpEx (mo) | NOI (mo) | Cumulative IO |
|---|---|---|---|---|---|
| 6 | 41% | $28,400 | $12,200 | $16,200 | ~$265,000 |
| 9 | 52% | $35,900 | $14,800 | $21,100 | ~$398,000 |
| 12 | 68% | $46,900 | $18,600 | $28,300 | ~$531,000 |
| 15 | 76% | $52,400 | $20,700 | $31,700 | ~$664,000 |
| 18 | 81% | $55,800 | $22,100 | $33,700 | ~$797,000 |
| 20 | 83% | $57,200 | $22,600 | $34,600 | ~$885,000 |
IO on $4.953M at 10.75% ≈ $44,370/month. Negative cash flow through month 14 is normal — the interest reserve exists precisely because NOI does not cover IO during fill.
Three-mile supply map on construction closes
Before Jaken Finance Group funds vertical, the file needs:
- Every operating store within three miles — sf, rates, occupancy signals
- Every under construction pad from Yardi Matrix, StorageCafe, and county permits
- Shadow supply — entitled but not yet vertical
- Household growth overlay for the ring
A REIT delivery at month 11 of your fill is not bad luck — it is a row on the map the underwriter priced on day one. Sponsors who omit pipeline pads get tighter extension terms or lower LTC at refi.
Related guides
- Self-storage facility financing
- Self-storage loan rates benchmarks 2026
- SBA vs bridge vs CMBS self-storage
- Commercial real estate financing
- Vacant land loans
- Commercial property calculator
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Rates, terms, and conditions offered only to qualified borrowers and are subject to change without notice. Composite examples are educational illustrations, not appraisals or commitments.