SBA loans for hotels and motels

Can you get an SBA loan to buy a hotel?

Yes. Hotels, motels and bed-and-breakfast inns qualify for SBA financing when you run the property as an operating business. Renting rooms to short-term guests is an active business in the SBA’s eyes, not passive real estate investment, which the SBA doesn’t finance.

Owners use SBA loans to:

• Buy an existing hotel or motel, including the land and building, furniture, fixtures and equipment (FF&E) and goodwill. See business acquisition loans.
• Build a new hotel, from buying the land through construction
• Renovate or change brands, including upgrades the brand requires
• Refinance existing hotel debt on longer terms
• Add working capital for payroll, supplies and slower seasons

Properties where most guests stay long-term, such as some extended-stay hotels, can look more like apartment rentals, which the SBA treats as passive real estate. If that describes your property, raise it with lenders early.

Should you use a 7(a) or a 504 loan for a hotel?

Both programs finance hotels. The better fit depends on how much of the project is real estate and how much is goodwill, renovation or working capital.

Feature	SBA 7(a) loan	SBA 504 loan
Maximum SBA amount	$5 million	$5 million debenture; the total project can be larger
Interest rate	Usually variable, capped at Prime + 3% to 6.5%	Fixed on the SBA portion
Longest term	25 years for real estate	25 years
Minimum equity	10% for purchases and start-ups	15%, or 20% for a new business
Often used for	Purchases with goodwill, PIP work and working capital in one loan	Construction and large property purchases where a fixed rate matters

A 504 loan pairs a bank loan with an SBA-backed loan from a Certified Development Company (CDC) and your contribution, split 50% / 40% / 10% (bank, CDC, you) on a standard project. A 7(a) loan puts everything into one loan with one lender.

Since July 4, 2026, a business can combine 7(a) and 504 financing for up to $10 million. Larger hotel projects often use a 504 loan for the building and a 7(a) loan for goodwill, FF&E or working capital.

How much down payment do you need for a hotel SBA loan?

The SBA minimum depends on the program and how long your business has operated:

• 7(a) purchase or start-up: at least 10% of the project cost. On a purchase, a seller note on full standby can cover up to half of it.
• 504 loan, established business: at least 15%, because hotels are generally treated as special-purpose property.
• 504 loan, new business: at least 20% when the business has operated for 2 years or less.

Definition

Special-purpose property: A building designed for one kind of business, such as a hotel, gas station or car wash, that would be costly to convert to another use. The SBA requires a larger 504 contribution for these properties.

Lenders can ask for more than the minimum, especially for construction, first-time hotel owners or properties with uneven results.

Can an SBA loan pay for a hotel property improvement plan (PIP)?

Yes. PIP costs can be part of a purchase loan or financed as a standalone renovation.

Definition

Property improvement plan (PIP): A list of upgrades a hotel brand requires, usually when a branded hotel is sold or changes brands, to bring the property up to current standards. The brand sets a deadline for finishing the work.

PIP work can range from new carpet and furniture to lobby redesigns, bathroom renovations and building systems. Because the brand can enforce the deadline, lenders treat the PIP as part of the project, not an afterthought.

Lenders typically want:

• A PIP cost estimate or contractor bids, often with a contingency
• The brand’s deadline and a schedule for the work
• A plan for operating while rooms are out of service

Many lenders hold renovation funds back and release them as work is completed and inspected.

Do hotel franchises qualify for SBA loans?

Yes. If the hotel operates under a brand, the brand must be listed in the SBA Franchise Directory before a lender can approve the loan. Independent hotels, motels and inns don’t need a listing.

Lenders also review the franchise agreement itself: its remaining term, the fees and any PIP that comes with a sale. Many lenders want the agreement to run well into the loan term, or a clear path to renewal. Check that your brand is listed before you sign a purchase agreement. See SBA franchise loans for how the directory works.

What do lenders look for in a hotel loan?

Lenders underwrite the property, its performance and you as the operator. Expect them to focus on:

1. Operating history. Tax returns, profit-and-loss statements and monthly occupancy reports for the hotel.
2. Performance trends. Occupancy, average daily rate (ADR) and revenue per available room (RevPAR), usually compared with nearby competitors in an STR report.
3. Cash flow. The hotel’s earnings must cover the new debt with room to spare. For a first-time purchase, the SBA requires debt service coverage of at least 1.25x.
4. Management experience. Hotel operating experience, a strong general manager or a professional management company.
5. Market and seasonality. Demand drivers such as highways, airports, universities or tourism, new hotels planned nearby, and how the property covers payments in slow months.
6. Property condition. An appraisal of the hotel as an operating business, plus a property condition report or the brand’s PIP.
7. Ownership and guarantees. Since March 1, 2026, all owners must be U.S. citizens or nationals. Owners of 20% or more personally guarantee the loan.

Purchases priced at $3 million or more also need a Quality of Earnings report, in which an accounting firm verifies that the seller’s reported earnings are real and repeatable.

How long can a hotel SBA loan be?

Terms depend on what the money pays for:

• Land and buildings: up to 25 years under 7(a), plus the construction period, or up to 25 years at a fixed rate under 504.
• Furniture, fixtures and equipment: up to 10 years, or longer when the equipment’s useful life supports it.
• Goodwill and working capital: up to 10 years.

When one loan covers several uses, the lender blends the terms into one. A longer blended term lowers the monthly payment, which often decides whether a hotel purchase cash-flows.

How do you find lenders that fund hotels?

Hotel lending is specialized. Some lenders finance hotels regularly and know the major brands’ franchise and PIP requirements; others rarely lend on hospitality properties at all.

SBA Loan Connect ranks lenders using the SBA’s public 7(a) and 504 loan records by NAICS code, so you can see which lenders actually fund hotels and motels like yours before you apply. Lenders we partner with are labeled as partners. See how we rank lenders.