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Using the SBA 7(a) Loan for a Hotel
Starting and running a business in the hospitality industry is expensive, which is why the SBA offers SBA 7(a) loans of up to $5 million to help business owners.
Starting and running a business in the hospitality industry is expensive, which is why the SBA offers SBA 7(a) loans of up to $5 million to help business owners.
Our team will connect you with the best nearby lender with experience in your industry. In our decades of capital markets experience, we’ve amassed a large rolodex of relationships with both lenders and borrowers like you. So, if you need an SBA loan and you want the best rates, you’ve come to the right place.
What Can an SBA 7(a) Loan Do for My Hotel?
Quite a lot. There are some limitations on SBA 7(a) loans, of course, but consider the uses below.
Buying an Existing Hotel Building
Whether you want to buy your owner-occupied property or are looking for a new location, we'll help you find a business mortgage that fits your unique needs.
Refinancing Your Current Hotel
Are you unhappy with the terms of your current loan? You can use an SBA 7(a) loan to refinance.
New Construction or Expansion of a Hotel
The SBA 7(a) loan has a $5 million maximum, and other SBA loan products can provide as much as $20 million. Let us connect you with a lender that can make your construction dream a reality.
Other Uses
The SBA 7(a) loan isn’t just for real estate; you can also use it to fund working capital for your hotel, for repairs, and for equipment.
Case Study: Expanding a Hotel in Knoxville
Luisa, a passionate entrepreneur in Knoxville, Tennessee, had successfully been running her 16-room hotel for several years. Her hotel had garnered a strong reputation for exceptional customer service and a cozy, welcoming atmosphere. As a result, demand for her hotel had steadily increased, and Luisa found that she was turning away potential guests due to a lack of available rooms. Recognizing the need to expand her business, Luisa decided to add seven new guestrooms to her property.
Luisa began her search for financing options, but she faced challenges in securing a traditional loan with favorable terms. A friend suggested she look into the SBA 7(a) loan program as an alternative. After conducting research and speaking with a knowledgeable SBA loan specialist, Luisa realized that the SBA 7(a) loan was the perfect fit for her hotel expansion project.
With the help of her loan advisor, Luisa prepared a detailed business plan outlining her vision for the expansion, including a comprehensive financial analysis and projections. She also provided detailed information about her existing hotel's performance and cash flow, demonstrating her ability to repay the loan. After submitting her application, Luisa received approval for the SBA 7(a) loan.
Luisa successfully used the loan to fund the construction of the seven new guestrooms, which allowed her to accommodate more guests and meet the increasing demand for her hotel. The expansion not only helped her increase revenue but also solidified her hotel's position as a premier lodging option in Knoxville.
This is a fictional case study provided for illustrative purposes.
How to Get Your Best Financing Option
To learn more about the SBA 7(a) loan program or to get a free quote, complete the form below.
Related Questions
What are the eligibility requirements for an SBA 7(a) loan for a hotel?
To qualify for an SBA 7(a) loan for a hotel, you must meet certain standards. These include good bookkeeping, understanding your creditworthiness, and having a solid business plan. Additionally, you must meet the eligibility and qualifications for the SBA 7(a) loan as outlined by the SBA.
What are the advantages of using an SBA 7(a) loan for a hotel?
The SBA 7(a) loan is a great option for small business owners looking to fund their motel. It is a versatile loan that covers almost all legitimate business expenses, including buying an existing hotel, constructing a new one, and refinancing existing debt. Additionally, the SBA 7(a) loan offers competitive interest rates and longer repayment terms than other loan products, making it an attractive option for hotel owners.
For more information on the SBA 7(a) loan, please visit https://www.sba7a.loans/sba-7a-loans-small-business-blog/sba-7a-loan-for-hotels.
What documents are required to apply for an SBA 7(a) loan for a hotel?
To apply for an SBA 7(a) loan for a hotel, you will need to provide the following documents:
- Agreement to purchase the business
- Letter of intent to buy the business
- Business tax returns for the past three years
- Any outstanding business debt
- Long-term business contracts
- Documentation of business assets
- Business lease agreement
- Incorporation documents and/or business license
- Business plan
- SBA Form 1919 (borrower information form)
- SBA Form 912 (statement of personal history)
- SBA Form 413 (personal financial statement)
- Financial statements, including a balance sheet, profit and loss, and income projection.
In addition, the SBA will usually order an independent business appraisal to give lenders an idea of what the true value of the business is.
To complete your application package, you’ll be required to submit SBA-specific forms and documents. The forms and documents commonly required in the application package include:
- SBA Form 1919 (borrower information form)
- SBA Form 912 (statement of personal history)
- SBA Form 413 (personal financial statement)
- Financial statements, including a balance sheet, profit and loss, and income projection.
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What are the maximum loan amounts for an SBA 7(a) loan for a hotel?
The maximum loan amount for an SBA 7(a) loan for a hotel is $5 million. Real estate and land loans for new construction or for the purchase of existing buildings have a maturity of no more than 25 years. Equipment and working capital loans have a loan term of 10 years. Additionally, you can borrow more than $5 million if you choose to take advantage of the SBA’s go green program. In this situation, you can borrow up to $16.5 million over the life of the hotel. However, you are limited to a cap of $5 million per qualifying project.
For more information, please see the following resources:
What are the repayment terms for an SBA 7(a) loan for a hotel?
The SBA 7(a) loan for a hotel has a loan term of 25 years for real estate and land loans for new construction or for the purchase of existing buildings. Equipment and working capital loans have a loan term of 10 years. See SBA 7(a) Loan Terms, Rates, Fees, Maturity for more information.