Hotel Financing Using an SBA 504 Hotel Loan

Hotel financing using an SBA 504 loan involves three principal parties: the borrower, an approved lender, and a CDC, or, a Certified Development Company. This type of commercial loan is backed by the federal government. However, as with all SBA loan products, the government itself does not directly lend money to borrowers. Rather, the actual lending is done through approved financial institutions, which must follow the government’s loan standards and requirements. Read on to learn more about hotel financing using an SBA 504 loan.

Hotel financing with an SBA 504 loan means it is structured in a specific way. For instance, this loan program requires various parties in order to make it possible. Here are the basic elements you need to know about hotel financing using an SBA 504 loan:

  1.  Loan term. The length of time for repayment ranges for this type of loan between 10 years and 25 years. Generally, commercial real estate purchases are set up with the longest terms, which can last up to 25 years in length.
  2.  Interest rates. The SBA 504 loan program offers low-interest rates. These are usually quite competitive, comparable to traditional commercial debt instrument rates, and may be fixed or variable in nature.
  3.  Down payment. For this type of commercial financing, the down payment can be as little as 10 percent or as much as 20 percent. Although, borrowers may opt to provide a larger down payment.
  4.  Amounts.  Additionally, this loan program offers up to $20 million for real property purchases.