SBA loans for hotels and motels

What SBA lenders approved for hotels

Hotels and motels (NAICS 721110, which excludes casino hotels) took 1,778 SBA 7(a) loans from FY2024 through June 2026, worth $4,847,296,000, from 206 lenders. The median hotel loan of $2,582,500 is about seventeen times the national median of $150,300. The middle half ran from $1,400,000 to $4,250,000, and the 90th percentile was $5,000,000, which is the most a single 7(a) loan can be. More than four in five loans, 1,459 of them, were $1 million or more.

The term tells you what the money bought. A median term of 300 months is 25 years, the maximum SBA allows, and it is only available for real estate. Most hotel 7(a) loans finance land and buildings, with furniture, fixtures and equipment, working capital and any goodwill carried alongside at shorter maturities.

Why the rate is low and the risk is in the term

The median hotel rate of 9% sits more than a point under the national 10.25%. That is mostly arithmetic. SBA caps variable 7(a) rates at the base rate plus 3% above $350,000, the lowest of its caps, and almost every hotel loan is above that line. Current pricing across lenders is on SBA loan rates.

The less comfortable figure is the fixed-rate share: 3.7%. Almost every hotel loan in these figures was approved at a floating rate, most of them for as long as 25 years. A property whose coverage is thin at today's rate can fall below it if the base rate rises, so careful lenders test the hotel's cash flow at a higher rate before they approve, and a borrower should run the same test on their own figures. See fixed vs variable rate business loans.

Long terms also bring SBA's prepayment rule into play. On 7(a) loans of 15 years or more, prepaying more than 25% in any of the first three years costs 5% of the amount prepaid in year one, 3% in year two and 1% in year three. Owners who expect to sell or refinance a hotel soon after buying it should price that in. See the SBA prepayment penalty.

How lenders underwrite a hotel

SBA requires debt service coverage of at least 1.15x, and from 1 October 2026 a change of ownership must show 1.25x on historical results. A hotel with net operating income of 1,250 against annual payments of 1,000 covers 1.25x. What is particular to hotels is how the lender builds that income figure and what it worries will change.

• Occupancy, average daily rate and revenue per available room. Lenders want these by month for at least the years on the tax returns, and they compare them against a competitive set of nearby hotels. A property outperforming its market is read differently from one riding a market that is already at its peak.
• The brand. A flag brings a reservation system and loyalty guests, and it also brings fees, standards and a franchise agreement with its own term. Lenders check that the agreement runs well into the loan and that the franchisor has no open default notices against the property.
• The property improvement plan. Brands commonly require renovation when a hotel changes hands or a franchise is renewed. The cost of that plan belongs in the project budget, and a lender will not treat it as optional.
• Reserves for furniture and equipment. Rooms wear out on a cycle. Lenders deduct a replacement reserve from operating income, so income that ignores it will be marked down.
• Who runs it. An owner-operator with hotel experience, or a management company with a record in the same brand and market. SBA looks at management experience on Form 1919, and lenders weigh it heavily in a business this operational.
• Demand drivers. Highways, hospitals, universities, a military base, a single large employer. A hotel that depends on one source of demand carries concentration risk even with no single customer on the books.

The appraisal does double duty. It values the real estate, which sets how much of the loan can take a 25-year maturity, and it often splits the price between land and buildings, furniture and equipment, and the business itself. How that split falls affects the loan's blended term and whether a separate business valuation is needed. See SBA blended maturity.

Buying a hotel with an SBA loan

Hotel purchases were 652 loans at a median of $3,123,000 and a median rate of 9%, 36.7% of hotel lending against 10.4% nationally. Buying an existing property is the main way small operators enter this industry, and SBA's acquisition rules apply in full.

• An equity injection of at least 10% of total project costs. Seller financing can count for up to half of that only if it is on full standby, with no principal or interest paid, for the life of the SBA loan. See seller notes and SBA standby.
• No earnout to the seller, and the seller may not stay on as an owner, officer or employee. The seller may consult for up to 12 months, or up to 24 months under SOP 50 10 8.1 from 1 October 2026.
• An independent business valuation where the amount financed, less appraised real estate and equipment, exceeds $250,000. In a hotel much of the price is real estate, so whether this applies depends on how the appraisal allocates value.
• From 1 October 2026, financial due diligence on every change of ownership, and a quality of earnings report where the acquisition is $3 million or more excluding real estate.
• From 1 October 2026, a change-of-ownership loan amortizes over no more than 10 years except the real estate share, which can still run to 25 years.
• The brand's own approval of the buyer, which runs on the franchisor's timetable, not the lender's.

More on the deal itself is in financing a hotel acquisition and buying a business with its real estate.

7(a), 504, or both

Hotels also lean on SBA 504: 906 hotel 504 projects in the period, about one for every two 7(a) loans, at a median of $2,356,500. 504 finances owner-occupied real estate and long-life equipment, typically 50% from a bank, 40% from a CDC and 10% from the borrower. The borrower's share rises to 15% for a new business or special-purpose property and 20% for both, and lenders and CDCs commonly treat a hotel as special-purpose. The CDC's share goes up to $5 million.

Since July 2026 the 504 and 7(a) limits are counted separately, so a larger hotel can pair a 504 for the building with a 7(a) for the rest. Above that, the conventional hotel lenders take over. See SBA 7(a) vs SBA 504 and acquisitions above the SBA limit.

Preparing a hotel file

SBA's standard list applies: 2–3 years of business tax returns, a P&L and balance sheet with a year-to-date P&L through last month-end, a debt schedule with copies of any notes being refinanced, and personal tax returns and a personal financial statement for each owner of 20% or more. An owner resume supports Form 1919.

A hotel file should add monthly operating statements split by department, occupancy and daily rate by month, competitive-set reports, the franchise agreement and any improvement plan, the management agreement if there is one, a capital spending history, and property tax and insurance bills. For a purchase, add the letter of intent and the latest full year of the seller's figures. An owner refinancing should know SBA's rules first: the new payment must be at least 10% lower, the debt current for the last 12 months, and an active merchant cash advance cannot be refinanced. See refinancing cash advances for hotels.

Transparent builds that file into a full lender package — financing model, lender presentation, blind teaser and underwriting memo — in a day once the documents are in, and takes it to the lenders in its book that write SBA 7(a) and 504, 278 of them, alongside conventional lenders where the loan is larger than SBA allows. On SBA loans the lender pays Transparent, not the borrower. See the package.