SBA 504 Loan
SBA 504 Loan
The Small Business Administration – SBA 504 Loan is a type of SBA loan that is only eligible to be used for hotel purchase or hotel construction. Presently, it cannot be used for hotel refinance. The SBA 504 Loan is a great loan for experienced hotel buyers that are seeking to purchase a performing hotel with a low down payment and fixed rate loan.
Here is an overview of a typical SBA 504 Hotel Loan:
- An SBA 504 Loan is commonly structured 15/50/35 with the buyer down payment of 15%, with the bank doing a loan for 50% of the purchase price and with the SBA providing a second loan for 35% of the purchase price. Thus the term 15/50/35.
- Hotel purchase prices of up to $13.5 million
- Low down payment commonly of only 15%
- Low blended fixed rates
- Terms on the 50% Bank loan are commonly 10 years with a 25 year amortization. The terms on the 35% SBA Loan is 20 years with a fixed rate for 20 years.
- FICO minimum usually 650
- Property must reflect adequate debt service in last tax year at minimum and be stable or upward trending
- Generally exterior properties are not acceptable unless the property is in excellent condition and is high performing.
- Age of property should be ideally less than 25 years old
- Generally franchise properties only. Independent properties will be considered if high performing.
- Buyers must have at least 2 years of hotel management experience
- Nationwide lending in all markets
Call HBC Lending today at 1-800-996-0794
