SBA Hotel Loans: 7(a) and 504 Financing for Hotel Owners
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SBA
SBA hotel loans let an owner buy, build, or refinance a hotel with about 15% equity where the property’s cash flow supports it, through either the SBA 7(a) or the SBA 504 program. SBA financing can reach up to 85% of total project cost, which includes the acquisition price, PIP, closing costs, and SBA guarantee fees. The property’s cash flow must support the debt at that leverage, so the loan amount is ultimately governed by performance.
Is an SBA loan right for me?
SBA may fit if:
- you are an owner-operator buying, building, or refinancing a hotel;
- you want a lower down payment, around 15% of total project cost, where the property’s cash flow supports it;
- you are a first-time hotel buyer, or you want to finance a PIP together with the acquisition.
Buying or refinancing a hotel while you’re also running one is a lot. SBA financing can lower the cash you need at closing, and we handle the packaging so you’re not chasing paperwork between shifts.
Many people feel SBA loans require too much paperwork and take a long time to close. Here is how we keep the process moving:
- We work with lenders experienced in hotel loans.
- We 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, which takes a step out of the process.
- We package your SBA loan request for you.
- We manage the entire process for you – from start to finish.
Types of SBA loans
- SBA 7(a)
- SBA 504
SBA Financing for Hotels
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 7(a) 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 7(a) 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 7(a) 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
- Rates can be fixed or variable, within SBA maximums.
- 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
SBA 504 for a Hotel
SBA 504 has more parties involved (a bank and a Certified Development Company), which is why packaging matters. In return you get a long-term fixed rate on part of the loan.
The SBA 504 consists of a loan from a bank lender combined with a loan from a Certified Development Company (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 7(a) to secure
- The SBA portion of a 504 loan is generally up to $5 million per project ($5.5 million for certain energy and manufacturing projects). The bank portion isn’t capped by the SBA, so total project size can be much larger.
- 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
- 10, 20, or 25-year terms; the CDC portion is fixed for the life of the loan.
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 7(a) 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 7(a) loan. SBA refinance rules changed in 2025 and again on October 1, 2026. Have your current loan reviewed rather than assuming you do or don’t qualify.
Financing an extended-stay property? Our guide to extended-stay hotel financing covers how lenders read weekly and monthly rate revenue.
Who qualifies for an SBA hotel loan in 2026?
Two SBA rules that changed recently decide whether an SBA 7(a) or 504 loan is open to you.
Ownership. Since March 1, 2026, every direct and indirect owner of the borrowing business must be a U.S. citizen or U.S. national whose principal residence is in the United States. Owners who hold a green card, or who live abroad, do not meet the rule.
Change of ownership. SBA rules in effect since October 1, 2026 set out four categories for a change of ownership, including an owner buyout, and some transactions need a Quality of Earnings report. If you are buying a hotel or buying out a partner, tell us how the ownership will change.
If SBA is not open to your deal, conventional or bridge financing may still fit.
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: October 2026