Hotels and the SBA 504 Loan Program
Can you take out a 504 loan for a hotel? Yes, you can! With $194 billion in revenue in 2018, the industry has grown by 4.4% since 2013. These loans are focused on growth and development, so if your hotel is expanding, or you’re adding additional equipment, renovating rooms, or otherwise building a better business, you can consider this source of funding.
With a 504 loan, hoteliers will be able to borrow up to $5 million for the purchase of real estate, buildings, construction of buildings, the purchase of additional equipment needed (washing machines, food prep machines for an attached restaurant, etc.). In addition to traditional hotels, borrowers can also take out loans for a variety of other hospitality property types, such as motels, resorts, and bed and breakfasts.
Borrowers Are Eligible for Additional Funds Under the SBA 504 Green Program
Note that 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. However, in order to qualify for the an SBA 504 green loan, you will need to reduce your building’s energy use by 10%, switch to a new building that uses 10% less energy, or replace 10% of your building’s energy use with energy from an alternative source, like wind, solar, or geothermal.
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