How to Obtain Financing for Your RV Park

With RV shipments reaching all-time highs in the United States, the long-term growth prospects for the RV park industry remain bright. As supply strives to keep up with continuously rising demand, investors are seeking paths to obtain financing for new RV parks.

This article is aimed at exploring the different RV park financing options available for those looking to get into the profitable campground business. 

Options for RV park financing

There are plenty of options to raise funds for your RV park business. You may get hold of one or more of them, but the important thing is that they are suitable to support your business vision and in accordance with your financial and personal situation. For more specialized assistance in investment analysis experts like Parikh Financial will be a solution.

Let’s take a look at 6 different options for entrepreneurs looking for funds to kickstart their RV park business:

Bank loans

The most common method to obtain financing in the United States. With the industry showing extraordinary results in recent years, banks are prone to fund RV park projects if they look solid enough. 

Be aware that if you choose this method, your business plan needs to be well grounded. Aside from strong credit history, banks will require credible financial projections to demonstrate your business’s financial feasibility. Make sure your financial projections are based on realistic expectations and that your plan contemplates dealing with contingencies.

Guaranteed loans from the SBA

The Small Business Administration offers programs in which it acts as a guarantor to loans that are made by commercial lenders. SBA-guaranteed loans are now widely used by entrepreneurs because of the attractive terms that they feature, and because they allow them to gain access to bank loans that may be otherwise difficult to get hold of.  

Crowdfunding

This is a still relatively new method of obtaining funding for a business. Websites like Indiegogo, SeedInvest, or Wefunder are designed to help entrepreneurs obtain financing by connecting them with investors and supporters that can fund their vision. Crowdfunding is a flexible, low-risk method of obtaining financing for your RV park.

Personal savings

The obvious advantage of financing your RV park business yourself is that there is no risk of foreclosure. You can do this by using your savings or by selling a property or an asset you own. The downside of it is that your budget will of course be limited to your savings, while other types of funding may allow you to build a campground with more RV sites or better amenities.

Friends or family

Many successful businesses in North America have started with a little help from some friends (or family). Sometimes support is offered directly through donations, and in other cases through formal or informal business loans. In this case, documenting loan contract terms is always a wise move that reassures both parties that they are legally protected.

Another method that is widely used in these cases is an equity funding agreement, where the owner gives investors a percentage of the profits or a certain level of control over the business.

Government programs

Governments of both Canada and the United States offer different funding program options that include government grants, government loans, and tax breaks and credits. If you are in the United States, go to grants.gov to find out which of the different options available better suits your needs.

The role of your business plan in funding your RV park

Your business plan is an essential part of obtaining financing for your RV park. A business plan should enable your partners, lenders, or investors to understand your vision, your company, and the financial projections of the business.

Aside from that, a well-designed business plan is key to keeping you focused on your goals and guiding you through the launch process.

So let’s go through a quick overview of how to develop a business plan that helps you maximize your opportunities of getting the financing you need for your RV park.

1. Research the industry

Learning the nooks and crannies of the RV park business is key to making the most profitable decisions and positioning your RV park in this growing and highly competitive market. You can begin by checking out beginner’s guides on how to build and run a profitable RV park business.

You should analyze the competition to identify opportunities. Also, you can learn about the current state of the market by taking a look at recent surveys and statistics made by specialized institutions.  

2. Estimate costs accurately

Startup costs of building an RV park from scratch are usually estimated between $180,000 and $450,000. This includes buying and preparing the land, building the RV sites, and building all the basic amenities such as a septic system, a water system, and hookups.  

Your business plan should also take into account operating expenses such as utilities, taxes, maintenance, labor, and more.

Make sure to be thorough with your cost estimations, since they should be completely credible and realistic as you present them to your partners or investors. 

3. Provide financial projections

No matter what your financing source or sources, you will need to offer them assurances that the investment in your RV park will provide adequate returns. So to begin with, you should develop a break-even analysis to calculate how much revenue your business needs to generate to cover the expenses. 

Also, your financial projections should include profit and loss estimates, balance sheet estimates, and cash flows.  

If your business plan is properly designed, it will help you go through as you take each of the steps needed to build and run a successful RV park business. Yet you should also be aware that, after you have launched your business, you will need to plan for periodic investments to keep up to date with changing demands in the market.

Investing for growth: RV park financing beyond launch

As campgrounds bloom and RVers look for more sophisticated experiences, expanding amenities has become key to attracting new RVers to your RV park. A recent survey by the RV Park Industry Association revealed that obtaining financing to build new amenities is one of the main challenges of the industry today.

Capital Lending is a finance solution by Roverpass that helps RV park entrepreneurs that are looking to build or expand their RV parks. Meeting a few minimum requirements allows you to access the capital you need to keep growing your business. By filling out a quick application, you will get multiple small business loan options at once. 

These are both thrilling and demanding times for the industry. At Roverpass, our mission is to arm RV park entrepreneurs with a diverse array of solutions, designed to enable them to prosper. Continue reading our blog to stay abreast of the key topics shaping the RV park business today. Additionally, if you seek a collaborative space to share ideas and learn from seasoned professionals, consider joining our Facebook group—a vibrant community dedicated to the success and innovation of RV park owners like you.