Hotel SBA Loans

Owning and operating a hotel is hard work. This fast-paced industry requires you to ensure your property constantly evolves with the times. That means that securing the right financing is essential for you to remain competitive and expand your business.

Whether you are looking to purchase a new property, renovate an existing hotel, or refinance your current debt, Peoples Bank is here to help. Our Hotel Loans offer flexible and affordable options that will meet the unique needs of hotel owners like you.

Types of Hotel Loans Available

Conventional, SBA, USDA, CMBS

What are SBA Loans for Hotels?

Before discussing why an SBA loan may be the right choice for your hotel, we need to define it. SBA loans are given out by the Small Business Administration (SBA). However, the SBA does not fund the loans themselves. Instead, it partners with approved private lenders and guarantees a portion of the loan. Then, if the business owner defaults, the SBA will pay its guaranteed portion of the loan back to the lender.

SBA loans can be a great way for small business owners to receive funding they otherwise would not qualify for. Depending on the type of loan you choose for your hotel, the funds can be used for a variety of things, including the following.

Renovation and expansion
Acquiring new properties
Purchasing equipment and other furnishings
Working capital
Refinancing

What Types of SBA Loans are Available for Hotels?

The SBA provides multiple types of loans for small businesses, including hotels. These are each designed to meet different financial needs. We listed the most common SBA hotel loans below.

7(a) Loan Program: The SBA’s most popular program, as it is also the most flexible and affordable. It is ideal for hotels needing funds for various purposes, including purchasing real estate, renovation, refinancing debt, and working capital.
504 Loan Program: These loans are specifically designed to help borrowers purchase fixed assets, such as real estate or large equipment. They are an excellent option for hotels that want to buy or renovate property or make significant capital improvements.
Express Loans: SBA Express Loans offer a quicker application process and faster approval times than traditional SBA loans. They are a good option for hotels needing smaller amounts of funding quickly.

At Peoples Bank, we specialize in the 7(a) Loan Program. Our hotel financing experts are ready and waiting to walk you through the application process today!

Benefits of an SBA 7(a) Loan for Hotels

The SBA 7(a) loan program offers numerous benefits for hotels, making it one of the most attractive financing options for those in the hospitality industry. Let’s discuss some of the benefits now.

The loan can be used for a wide range of purposes.
The interest rates may be less than other loan types depending on the current market cycle.
Lenders offer longer repayment terms, for example, up to 25 years for real estate and up to 10 years for equipment.
Lenders typically require lower down payments than traditional loans (10%-15% as opposed to 20%-30%).
There are lots of refinancing options.
This is one of the first programs that the government bails out during a crisis as was seen during the Covid pandemic.

Drawbacks of SBA 7(a) Loans for Hotels

While there are many benefits to SBA 7(a) loans for hotels, there are also a few drawbacks. You should consider these when deciding if these loans are right for your business.

The application process can be complex and lengthy if not working with an experienced SBA lender.
You must provide a personal guarantee, adding an element of risk to the borrowing process.
There is a required upfront fee that is paid directly to the SBA.

Does Your Hotel Need an SBA 7(a) Loan?

Clearly, there are more advantages to SBA loans for hotels than drawbacks, but that does not mean an SBA loan is the right choice for your business. Here are a few questions to ask when deciding if your hotel needs an SBA 7(a) loan.

Are you looking to purchase a new property or expand your existing property?
Do you need to refinance existing debt?
Is working capital a challenge?
Do you have equipment or furnishing needs?
Are you considering a franchise opportunity?
Do you meet the eligibility requirements for an SBA hotel loan?
Can you afford the loan payments?
Do you have a backup plan in case things go south?

If the answer to any of these questions is yes, then an SBA 7(a) loan for hotels may be right for you. Contact Peoples Bank today and our professionals can discuss your options.

The SBA Hotel Loan Application Process at Peoples Bank

At Peoples Bank, we structure our loan application process to help hotel owners like you secure SBA 7(a) loans financing. Here is a brief overview of what that process will look like:

Consultation: Our loan officers will assess your hotel’s eligibility and needs to determine if an SBA 7(a) which loan product is right for you. They will also help you outline your specific needs to ensure the bank understands your goals.
Application: Before submitting your application, you will need to collect all the necessary documentation. These documents may include your business plan, financial statement, tax returns, personal financial statement, collateral details, and legal documents. Our team can help you determine the documents you need so that everything will be in order when you submit your application.
Approval: After submission comes the hard part: waiting for approval. This may take 60-90 days, depending on the type of SBA 7(a) loan you are applying for.
Funding: Finally, once you are approved, we will help you finalize the loan and then disburse the funds to you.

Don’t let financing stand in the way of your hotel’s growth and success. Whether you need an SBA 7(a) a loan now or are just exploring your options, the team at Peoples Bank is here to help. Contact us today or give us a call today at (843) 606-6058 or toll-free at (855) 406-0197 to schedule a free consultation with one of our hotel financing experts.