RV Park Financing: How to Pay for an RV Park or Campground

The SBA 7(a) program is the most common SBA loan for RV park purchases. A bank or other approved lender makes the loan, and SBA guarantees part of it, which lets the lender accept a smaller down payment and a longer term than it would on its own. A 7(a) loan can cover the land, buildings, equipment and the business itself, including goodwill.

Fits

Buying an operating park up to $5 million, including the business value

Loan size

Up to $5 million

Down payment

At least 10% of the project cost when you buy a business. A seller note can count toward up to half of that, but only if it is on full standby (no payments) for the life of the SBA loan.

Term

Up to 25 years for the real estate portion of a purchase; up to 10 years for working capital and goodwill, and generally 10 for equipment

Lender looks at

Debt service coverage of at least 1.25 times for a business purchase, the park’s tax returns, your experience, and whether more than half of revenue comes from stays of 30 days or less

An SBA 504 loan splits the financing between a bank and a Certified Development Company (CDC). It is built for real estate and long-life equipment rather than goodwill or working capital, so it fits parks where most of the price is land and improvements.

Fits

Buying or building a park where real estate is most of the price

Structure

Typically 50% bank loan, 40% CDC loan, 10% from you

Down payment

10%, or 15% for a business two years old or less or a special-purpose property, and 20% if both apply. SBA’s special-purpose list does not name RV parks, so ask the CDC how it treats yours.

Term

CDC portion of 10, 20 or 25 years; the CDC loan is limited to $5 million per business

Lender looks at

Debt service coverage of at least 1.15 times, plus the same short-stay revenue test as 7(a)

A local bank or credit union may lend without an SBA guarantee, especially if it knows the area. Expect more money down and a shorter term, but a faster process.

Fits

Experienced buyers, larger down payments, parks with steady year-round income

Down payment

Typically 20% to 35%

Term

Typically a 5- to 10-year loan with payments figured over 20 to 25 years, so a balance is due at the end

Lender looks at

Debt service coverage (often 1.25 times or more), your liquidity and net worth, and how much income comes in the off-season

Many park owners will carry part of the price as a note, especially owners of small parks that banks find hard to underwrite. Seller financing can cover a gap in a bank deal or, for a small park, be the whole loan. Terms are whatever you negotiate. If you also use SBA, the seller note has to follow SBA's rules, including standby if it counts toward your down payment.

The USDA guarantees loans from approved lenders for businesses in rural areas, which the program defines as places outside cities or towns of more than 50,000 people. Resort trailer parks and campgrounds are on the program's eligible list.

Fits

Rural parks, including larger deals above the SBA limit

Loan size

Up to $25 million per borrower

Guarantee

Up to 90% by rule; USDA sets the actual percentage each year

Equity

At least 10% balance-sheet equity for an existing business, 20% for a new one

Term

The useful life of the assets, up to 40 years

A bridge loan is short-term, often interest-only, financing from a private lender. Buyers use it when a park cannot qualify for permanent financing yet, for example because occupancy is low or the books are poor, and they plan to fix the park and refinance. Bridge loans typically cost more and run one to three years, so you need a clear plan to repay or refinance.