How to find and buy an RV park for sale with business-friendly financing through the SBA 7(a) Loan Program.
The Big Picture: Overall Market Growth
A recent surge in the number of camping households paints an optimistic picture of the future for the industry. According to the latest North American Camping Report from KOA, there were 93.8 million active camper households in the US in 2021. That’s approximately a 9% increase from 2020, and a 14% increase since 2019.
More camping households are powering more profitability in the industry. After an expected dip in taxable revenue generated by RV campgrounds in 2020, the industry appeared to recover in 2021 with almost $2 billion in revenue reported for the year.
Additionally, the Small Business Administration approved over $77 million in business-friendly financing through the SBA 7(a) Loan Program during the 2022 Fiscal Year. The funds were approved for RV park owners start, grow, or acquire a park to help the industry continue to grow this year and beyond.
Total Financing Amount Approved for RV Park Owners in FY 2022 (SBA Atlas)
Where to find RV Parks for Sale
Online Databases and Marketplaces
Databases like Flippa, BizBuySell.com, LoopNet, and BizQuest help business sellers and buyers connect online. Potential buyers can use the marketplaces to search through RV parks for sale in their region, desired industry, and budget.
Industry-specific online databases for RV parks and campgrounds for sale could help you narrow your search faster. A few include:
In addition to helping you find a business for sale, digital marketplaces are also valuable research tools. Use online databases to understand your market from a high-level point of view to strengthen your ability to make the most competitive offer.
Successful campgrounds are largely dependent on the location and land of the site, more so than most businesses. If you are looking to build a campsite, you may also want to search through a commercial real estate database to understand the value and market value of land for sale.
Business is all about who you know. You may be surprised by how many people within your own network could be a resource to find an RV park for sale. This approach to finding a business requires more patience on your side but could help you feel confident in your decision in the long run. Acquiring a business using a personal tie may facilitate more trust in the process once you’re ready to buy.
Retirement and relocation are two common reasons entrepreneurs decide to sell healthy, profitable businesses. Start thinking about who you know in these stages of life. Do some targeted outreach to start getting your name out there as a potential buyer.
Even if you don’t know anyone ready to sell their business right now, you could become the first person they think of when they are ready to transition.
Work with a Broker/Consultant
A business broker may help you find a business for sale relatively quickly. The job of a broker is to move businesses between parties, so they have an ever-evolving roster of businesses at their fingertips to help connect you to the right one. A broker may incur significant fees for facilitating the transaction. Be sure to ask about their fee structure before you begin working together to avoid any surprises.
Determine if RV Parks are a Good Investment for You
Is buying an RV park for sale profitable? RV parks can be a good investment if the market, buyer financials, financing plan, and management plan are all aligned. Consider these factors when determining if you should buy an RV park for sale:
Trends in Your Regional Market and Customer Base
Campgrounds and RV parks that meet the demands of the current camper may have a better potential for success compared to those offering less in less competitive locations. This recent data from the 2022 KOA Campground Report could provide some insight on the modern customer:
- Approximately 40% of the 9 million + new camper households tried ‘glamping’ in 2021.
- 35% of urban campers (half of all camper households) went RVing for the first time in 2021.
- 23% of all new campers in 2021 stayed in an RV for their trip, and over 2 million of those RVers rented their RV.
- All-time high RV sales in 2021 corresponded with increased interest in camping of all types.
- Gen Z is by far the most diverse group of campers, but only 34% of Gen Z campers plan to continue camping. Their camping decisions were largely driven by COVID-19.
- 43% of new Gen Z campers reported trying camping because of the pandemic while only 34% reported a “love of the outdoors” as the motivation behind their camping trips.
- 57% of millennial U.S. campers worked to some extent during their trip in 2021, a trend that coincided with the rise of remote work.
- Affordability is driving the rise of camping in the U.S., particularly among families with kids, with 37% of campers reporting the likelihood of replacing their leisure travel with camping trips.
* Kampgrounds of America, Inc. (n.d.). (publication). North American Camping Report 2022 (8th ed.).
Market trend data can help you determine a profitable strategy for your future growth as an RV park. Based on these statistics, it may be wise to plan for features in your RV park that appeal to brand new camper households, those looking for an option to stay semi-connected to their work and lives online, and families that are looking for unique experiences to replace their family vacations as their new leisure travel of choice.
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Your Intended Level of Involvement
Do you plan to hire employees to manage the RV park, or do you plan to stay involved in the day to day operations of the RV park? Your level of involvement in day-to-day operations could significantly impact the RV park’s revenue after accounting for employee salaries. This should be taken into consideration when forecasting future profitability based on current business financials of an RV park for sale.
If the seller of the RV park is basing projections off a business model that does not account for a manager’s salary, it may not be accurate to expect the same results if you plan to hire an operator instead of operating the park yourself.
When predicting the profitability of an RV park, account for your expected level of involvement at the start as well as the level of involvement you wish to maintain long term.
Your Current Financials and Financing Options
It’s important to understand your current financial position before making any big leaps. It’s even more crucial if you’re assessing financing programs that could help you increase revenues by leveraging attractive loan terms to buy an RV park for sale.
How is your current cash flow? Do you have any outstanding debts? What assets or property do you own that could provide additional security? Do you own any other businesses?
A financing partner will ask these types of questions as they help you assess your options and feasibility as a new business owner.
You may want to consider financing options even if you are able to pay cash to buy an RV park, because the right financing could help you maintain your liquidity throughout and after an acquisition. For this reason, using the SBA 7(a) loan to buy an RV park can be a great option.
The SBA loan is a financing option that can offer competitive loan terms to businesses like RV parks that may be difficult to collateralize, a necessary requirement to secure a loan on similar terms through conventional financing. The extended loan term of the SBA loan may also reduce monthly payments. This gives RV park owners more capital month to month to reinvest in growing the business and increasing profits even while paying back the loan.
How you finance buying an RV park for sale could make a significant impact on the profitability and long-term growth of the venture. Using business-friendly financing to buy an RV park for sale could help you safeguard your investment into the business by freeing up liquidity month to month and powering your acquisition with terms that are tailored for increasing profitability long term.
How to Buy an RV Park for Sale with an SBA Loan
The SBA 7(a) loan tends to be a good option for RV park owners because of the loan’s low collateral requirements, flexible use of proceeds, and the extended repayment terms of the SBA loan.
SBA Loan Benefits for RV Park Owners
- Collateral Requirements: Conventional business loans may be hard to secure for buying an RV park because of the collateral requirements. RV parks and campgrounds are categorized as ‘specialty properties’ which would could restrict your options for more competitive loan terms under conventional programs. However, one benefit of the SBA loan is the option for more diverse and lower collateral thresholds. You could still qualify for the same, if not better loan terms using this program than would be possible with conventional bank loans.
- Flexible Use of Proceeds: In addition to business acquisitions, the SBA loan has a wide range of eligible use of proceeds which RV park owners could use to grow their park after purchasing it. From working capital to cover expenses in the off season, to hiring extra employees for the busy season, to renovations and specialty additions, the SBA loan gives RV park owners the freedom to use proceeds the way they need to.
- Extended Repayment Terms: As stated above, the long repayment terms help business owners conserve monthly cash flow through the life of the loan. This frees up capital month to month to so that you have more to reinvest back in your RV park.
How to Get an SBA Loan for an RV Park
It’s best to start the financing process after you’ve found a specific park or business you’re interested in purchasing. This makes it possible for your lending officer to provide specific information on your options and potential loan terms so that you have the clarity needed to confidently move forward.
The SBA loan application process at West Town Bank & Trust is broken into 5 key phases:
1. Determine Eligibility
You need to meet these four basic criteria to qualify for SBA loans:
- Operate in the US.
- Operate for profit.
- Be considered a ‘Small Business’ by the SBA.
- Credit score of at least 665 (banks may have different credit score requirements for SBA loans.)
2. Speak with a Lender
One of our lenders will schedule a time to talk one on one about your business goals and growth plan. They’ll confirm your eligibility by analyzing your information and goals to determine if an SBA loan is a good fit for your next phase of growth.
If an SBA loan isn’t the right fit, your lender will share information on other financing options you might want to consider.
If you are eligible for an SBA loan and it’s a smart move for your goals, your lender will send you a list of documents to move forward with the application.
3. Prepare Buyer and Seller Documents
To use an SBA loan to buy an RV park, you’ll need documents that breakdown your business’s financials and your seller’s. The document checklist for SBA loans includes:
- Business and personal tax returns (past three years)
- Business debt schedule
- Business interim financial statements
- Personal financial statement for all guarantors
Keep in mind, because of this requirement you cannot complete the full SBA application unless you’ve already engaged an RV Park seller. Resume the process at Step 4 once you’ve identified the RV park you’d like to purchase and have secured a Letter of Intent (LOI) and/or Purchase Agreement from the Seller.
4. Complete the Full SBA Loan Application & Underwriting Process
Use your collected documents to complete the full SBA 7(a) loan application. The application will go through an underwriting and closing process with the bank’s Lender Service Provider. You’ll work hand in hand with the team to complete every line item needed to apply for an SBA loan.
5. Get Funded to Buy a Business
If your loan is approved, the funds will be available for your acquisition with direct support from your lending institution. Use the money to buy your business and kickstart your growth.
Buying an RV Park or campground business can be an exciting and profitable venture. With the right financing plan, you can maximize your investment to pay off the purchase amount while keeping cash in the park and growth on the horizon. Get started funding your RV Park with our Pre-Qualification form below: