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SBA Loans for Hotels
Updated: Dec 25, 2023
Navigating the SBA's 7(a) Loan Landscape for Hotels (Also Includes the Hospitality Industry)
Updated: 12/17/2023
Visit the SBA website here:
***Please refer to the SBA website for the latest guidelines around SBA loans for hotels.***
SBA Hotel Financing: A Comprehensive Guide to SBA 7(a) Loans
Introduction:
In the dynamic landscape of small business financing, the Small Business Administration's (SBA) 7(a) loan program stands out as a beacon of support for entrepreneurs.
In this detailed blog post, we'll delve into the various types of SBA 7(a) hotel loans, exploring their unique features, eligibility criteria, and how they can serve as a powerful tool for hoteliers striving to achieve their business goals. Please note that all information presented here is credited to the SBA.
Types of SBA Hotel 7(a) Loans:
1. SBA Standard 7(a) Hotel Loans:
- SBA Hotel Loan Amount: $500,001 to $5 million
- Maximum SBA Guarantee %: 75%
- Interest Rate: Negotiable but within SBA maximum
- Revolving Lines of Credit: Permitted under specific programs
- SBA Turnaround Time: 5-10 business days
- Collateral: Varies based on SBA hotel asset value
- Credit Decision: By SBA or qualified hotel lenders with delegated authority
2. SBA Hotel 7(a) Small Loans:
- Maximum SBA Hotel Loan Amount: $500,000
- Maximum SBA Guarantee %: 85% for loans up to $150,000, 75% for loans over $150,000
- Interest Rate: Negotiable but within SBA maximum
- SBA Turnaround Time: 2-10 business days
- Collateral: No collateral required for SBA hotel loans $50,000 or less; for higher amounts, SBA hotel lender policies apply
- Credit Decision: By SBA or qualified hotel lenders with delegated authority
3. SBA Hotel SBA Express:
- Maximum SBA Hotel Loan Amount: $500,000
- Maximum SBA Guarantee %: 50%
- Interest Rate: Negotiable but within SBA maximum
- Revolving Lines of Credit: Up to 10 years
- Collateral: Not required for SBA hotel loans up to $50,000; existing collateral policy for higher amounts
- Credit Decision: Made by the SBA hotel lender
4. SBA Hotel Export Express:
- Maximum SBA Hotel Loan Amount: $500,000
- Maximum SBA Guarantee %: 90% for loans up to $350,000, 75% for loans over $350,000
- Interest Rate: Negotiable but within SBA maximum
- Revolving Lines of Credit: Up to seven years
- Collateral: Not required for SBA hotel loans up to $50,000; existing collateral policy for higher amounts
- Credit Decision: Made by the SBA hotel lender
5. SBA Hotel Export Working Capital:
- Maximum SBA Hotel Loan Amount: $5 million
- Maximum SBA Guarantee %: 90%
- Interest Rate: Negotiable
- Revolving Lines of Credit: Terms of 36 months or less
- Collateral: Export-related SBA hotel inventory and foreign accounts receivables
- Credit Decision: By SBA or qualified hotel lenders with delegated authority
6. SBA Hotel International Trade:
- Maximum SBA Hotel Loan Amount: $5 million
- Maximum SBA Guarantee %: 90%
- Interest Rate: Negotiable but within SBA maximum
- SBA Turnaround Time: 5-10 business days
- Credit Decision: By SBA or qualified hotel lenders with delegated authority
7. SBA Hotel CAPLines:
- Various programs catering to short-term and cyclical SBA hotel working-capital needs
- Maximum Maturity: Up to 10 years (except SBA Hotel Builders CAPLine)
- Specific Programs: SBA Hotel Seasonal CAPLine, SBA Hotel Contract CAPLine, SBA Hotel Builders CAPLine, SBA Hotel Working CAPLine
Conclusion:
SBA's Hotel 7(a) loan program serves as a strategic financing avenue for hoteliers, offering a diverse range of funding options. Understanding the intricacies of each SBA hotel loan type empowers hotel entrepreneurs to make informed decisions aligned with their business objectives. For more details, refer to the official SBA documentation (SOP 50 10).
