Hotel Financing: SBA vs Conventional
Hotels are among the most cyclical commercial real estate assets — and one of the most specialized. Financing exists, but the lender pool is narrower than for multifamily or industrial, and the structure of each deal matters more.
SBA Hotel Financing
SBA 7(a) and 504 are major sources of hotel financing for smaller, owner-operated properties — typically limited-service or extended-stay brands. SBA loans for hotels often go up to $5–6.5 million combined, with 10% down and long terms.
Conventional and CMBS
Larger, full-service, and resort hotels typically use conventional commercial loans, CMBS, or specialty hotel lenders. Conventional pricing is generally tighter, but underwriting requires significant operating history and franchise quality.
Franchise Considerations
Most lenders strongly prefer franchised hotels with established brands. The franchise comfort letter — confirming continued franchise rights post-closing — is typically required. Independent hotels are financeable but often at lower LTV and higher rate.
Operating History and Star Reports
Hotel underwriting relies on Smith Travel Research (STR) reports showing occupancy, ADR, and RevPAR trends. Underwriters compare the subject property to its competitive set and stress-test against historical down cycles.
Educational content only — not advice. KQT Advisors, LLC is a commercial loan broker; we are not a lender, attorney, accountant, financial advisor, or fiduciary. We do not originate loans or make lending decisions. The information in this article is provided strictly for general informational and educational purposes and reflects our understanding at the time of writing. It is not — and must not be construed as — financial, tax, legal, accounting, investment, or any other professional advice, and creates no advisor-client relationship. Loan programs, rates, terms, eligibility requirements, fees, and approval criteria are set by individual lenders, the SBA, and other parties and are subject to change at any time without notice. Examples are illustrative only and not guarantees of outcome. Nothing here is a commitment to lend, an offer of credit, or a representation that any specific structure will be available to or appropriate for any borrower. Always consult your own qualified financial, tax, and legal advisors before acting on any information in this article. To the maximum extent permitted by law, KQT Advisors, LLC and its principals, employees, agents, and affiliates disclaim all liability for any direct, indirect, consequential, or incidental loss or damage arising out of any use of, reliance on, or inability to use the information in this article.