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SBA Hotel Financing

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SBA

An SBA loan is an excellent way to build, refinance or purchase a hotel because it’s easier to qualify for than other types of loans. In addition, SBA financing can reach up to 85% of total project cost — which includes the acquisition price, PIP, closing costs, and SBA guarantee fees — and terms are very favorable. The property’s cash flow must support the debt at that leverage, so the loan amount is ultimately governed by performance.

Many people feel SBA loans require too much paperwork and take a long time to close. That reputation is out of date. We make the process fast and easy, here’s how:

  • We only work with lenders with extensive hotel lending experience.
  • We only work with PLP (preferred) lenders. These lenders have the authority to make the final credit decision on your loan and do not have to wait for the SBA to approve your loan request. Turnaround time is drastically reduced, saving you weeks of waiting.
  • We package your SBA loan request for you.
  • We manage the entire process for you – from start to finish.

Types of SBA Loans

  • SBA 7A
  • SBA 504

SBA Financing for Hotels

Making the decision to go in on a new or existing hotel business can seem very daunting. In addition to having to do the jobs of many by yourself, you also need to work out how you plan to pay for the project.

Buying a new hotel or expanding an existing business can be expensive. Many people stumble at this initial phase because they think they will never secure the financing for it.

However, there is good news on the financing front. You may be able to secure an SBA loan for your hotel. The US Small Business Administration has a variety of loan programs that are used for the purpose of acquiring, building, accessing capital for, or refinancing, a hotel.

If you are wondering whether SBA hotel loans are right for you, HotelLoans.com is here to help ease your mind.

SBA 7A Loan for Motel or Hotel​

This is the most common type of SBA loan for a hotel. These loans are available for up to $5 million over long repayment periods. A borrower may also access up to $5 million through the SBA 504 program, for a combined total of up to $10 million in SBA-backed financing. The SBA 7A is versatile because it can be used for pretty much any type of hotel financing need, such as acquisition, real estate, construction, and working capital.

Facts about an SBA 7A loan:

  • The most common loan type
  • A maximum of $5 million
  • A one-time SBA guarantee fee applies, set by loan size and maturity, and is typically financed into the loan rather than paid out of pocket
  • Interest rates are variable, set against a published index plus a lender spread
  • Repayment terms vary depending on what the loan is for:
    • Up to 10 years for equipment loans
    • Up to 10 years for working capital
    • Up to 25 years for commercial real estate loans
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SBA 504 for a Hotel

SBA 504 hotel loans have the reputation of being one of the most challenging loans to secure. However, they are worth the effort because they ultimately have higher loan amounts and carry fixed rates.

The SBA 504 consists of a loan from a bank lender combined with a loan from a Community Development Corporation (CDC), which is a non-profit organization. This unique combination creates a long-term, fixed-rate loan ideal for hotel financing.

However, the caveat is that the loan can only be secured for certain purposes, and these tend to be the purchase of fixed assets like equipment or commercial real estate.

Facts about an SBA 504 loan:

  • More complicated than the SBA 7A to secure
  • Maximum allowance of $5.5 million
  • Fees apply and are typically rolled into the loan rather than paid out of pocket
  • The CDC portion is fixed for the life of the loan; the bank portion is set by the lender
  • Repayment terms are up to 20 years

What Projects Can You Secure an SBA Loan For?

The SBA loan can be used for a variety of hotel financing projects. The most common types are:

  • New Construction: If you plan to build a new hotel, SBA financing can reach up to 85% of total project cost. Because this type of loan is higher-risk, the borrower will need to put up personal collateral and meet high credit requirements.
  • Acquisition: Buying an existing hotel is the most common reason for requesting an SBA loan. Both the 7A and 504 can be used for this project, and financing can reach up to 85% of total project cost — acquisition price, PIP, closing costs, and guarantee fees included — where the property’s cash flow supports the debt. Bear in mind that the application process for an SBA can be lengthy, so factor this into your timeline.
  • Refinancing: If you need to free up cash to renovate or purchase equipment, then you might be able to secure a 7A loan. Eligibility rules for refinancing existing debt have been broadened in recent SBA guidance, so it is worth having the specifics of your current loan reviewed rather than assuming you do not qualify.

How to Apply for SBA Hotel Loans​

It is important that you have your ducks in a row before applying for an SBA hotel loan. The application process requires a large amount of information, so it is a good idea to gather it before starting. You are going to need to provide:

  • The value of the property or project
  • Your equity contribution — generally around 15% of total project cost, and more where the property is a new build or the borrower is new to hotel ownership
  • What your max monthly repayments can be
  • A property appraisal
  • Your personal credit history
  • Any collateral you have access to
  • Detailed business plan

If you are unsure about any of these processes, then it is a good idea to find a hotel financing expert to help. HotelLoans.com can walk you through this process.

We will match you with the right type of SBA loan and the right lender for your project. We underwrite the deal and prepare the complete loan package before it goes out, so the lenders we work with can review it and respond without delay.

If you are ready to find out more about the different types of SBA loans and how they can benefit you, then please contact us today. Our experts are looking forward to offering you a free consultation.

Last reviewed: August 2026

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