SBA 504 Loans for Motels
Anyone who travels will find that they need accommodations. For some, this means a 5-star resort. However, for a growing number of travelers, motels are the destination of choice. In fact, the motel industry generated almost $200 billion in 2018, growing at a rapid 4.4% between 2013 and 2018.
Better Financing Starts with More Options$1.2M offered by a Bank at 6.0%$2M offered by an Agency at 5.6%$1M offered by a Credit Union at 5.1%Click Here to Get QuotesFunding Your Motel Expansion with an SBA 504 Loan
Anyone who travels will find that they need accommodations. For some, this means a 5-star resort. However, for a growing number of travelers, motels are the destination of choice. In fact, the motel industry generated almost $200 billion in 2018, growing at a rapid 4.4% each year between 2013 and 2018. This means that it could be the perfect time to grow or expand your motel business.
While the industry is booming, funding can still be a challenge for motel owners who want to expand their businesses. SBA 504 loans can provide the capital needed for some of the most significant financial hurdles you’ll face. With up to $5 million available, you are allowed to purchase real estate, construct buildings, improve the land, and even purchase equipment. You can also modernize existing motels and other hospitality-industry facilities.
Despite their many benefits, SBA 504 loans are not designed to cover every need a business might face. For instance, they cannot be used to finance working capital. So, if cash flow is going to be a concern, you can combine your 504 loan with a 7(a) loan, or take out a conventional business loan.
We’re here to help you get the commercial financing you need. Simply fill out the form below for a risk-free consultation and a free SBA loan quote!
Related Questions
What are the eligibility requirements for an SBA 504 loan for a motel?
The eligibility requirements for an SBA 504 loan for a motel are the same as for any other industry. To be eligible for an SBA 504 loan, you must:
- Be a for-profit business
- Be located in the United States
- Have a tangible net worth of less than $15 million
- Have an average net income of less than $5 million after taxes for the past two years
- Be able to demonstrate a need for the loan
- Be able to demonstrate repayment ability
You must also meet the SBA's size standards, which vary by industry. For motels, the size standard is $32.5 million.
What are the benefits of an SBA 504 loan for a motel?
The SBA 504 loan is a great option for financing a motel purchase. It has a number of benefits, including:
- Up to $5 million available
- Fixed interest rate
- 20-year maturity rate for real estate and land
- 10% borrower down payment
The SBA 504 loan can be used to purchase real estate, construct buildings, improve the land, and even purchase equipment. It can also be used to modernize existing motels and other hospitality-industry facilities.
For more information, please visit https://sba504.loans.
What are the drawbacks of an SBA 504 loan for a motel?
The SBA 504 loan is not designed to cover every need a business might face. For instance, they cannot be used to finance working capital. So, if cash flow is going to be a concern, you can combine your 504 loan with a 7(a) loan, or take out a conventional business loan.
How long does it take to get an SBA 504 loan for a motel?
The SBA 504 loan process typically takes between 45 and 90 days, depending on the complexity of the loan and the lender's processing time. You can find more information about the SBA 504 loan process here.
What documents are required to apply for an SBA 504 loan for a motel?
When applying for an SBA 504 loan for a motel, you will need to provide the CDC and your lender with a wide range of documentation. This includes:
- Business tax returns for the previous three years
- Personal tax returns for the previous three years
- Personal history statement
- Personal financial statement
- Personal budget analysis
- Business financial statements for the previous three years
- Business debt schedule
- Revenue and expenses breakdown for the past year (month to month)
- Occupancy percentage and average daily rate information for the previous year (month to month)
- Occupancy percentage and average daily rate for the area
- Your hotel projection worksheet
- Interim financial statement (signed and dated, and including balance sheet and income statement dated within the previous two months)
- Accounts receivable aging (dated within the previous two months)
- Accounts payable aging (dated within the previous two months)
- Complete business plan
- One year of financial projections with assumptions
- Purchase agreement
- Written estimate from a contractor if the loan is for construction
- Letter of intent from the franchisor and a FUOC and franchise agreement (if applicable)
- Gift letter (if applicable)
- Previous government financing schedule
- Environmental impact questionnaire
- Application certification an authorization
- Documents pertaining to the ownership of other businesses and their finances (if applicable)
- Copy of loan agreement and SBA authorization if you have another SBA loan (if applicable)
- Copy of the original debt documentation (if refinancing a loan)
- Your original purchase agreement, including settlement sheet (if applicable)
For more information, please visit https://sba504.loans/application-checklist and https://www.sba7a.loans/sba-7a-loans-small-business-blog/sba-7a-loan-for-motels.