SBA Loans for Hospitality and Motels

The hospitality industry is competitive and can be difficult to break into due to the high costs associated with full-scale hotels. Small business owners who want to purchase or expand their property may seek financing through SBA loans, which are often used for smaller lodging establishments, such as motels, inns, and bed and breakfast properties.

At Business Funding Group (BFG), we have decades of experience with SBA loans for hospitality and motels. We have helped countless small business owners in the hospitality industry secure financing to develop their enterprises.

Benefits of SBA Loans for the Hospitality Industry

SBA loans are an attractive option for business owners in the tourism sector for multiple reasons. One advantage is that the government partially guarantees SBA financing, meaning it will repay some of the loan to the lender if the borrower defaults. As a result of this reduced risk, lenders are able to provide better loan terms and conditions. In turn, small business owners who might not qualify for traditional bank financing could be eligible for an SBA loan.

Depending on your circumstances and what you are seeking funding for, we could help your business secure a loan for a large amount and with favorable terms. The SBA 7(a) loan program can grant loan amounts of up to $5 million. The SBA 504 loan program has a higher limit of over $20 million.

Our professionals at BFG are familiar with the requirements for different loan options; we can help you determine which one fits your situation best.

How Loan Proceeds Can Be Used

SBA loan proceeds can be used for various expenses related to your tourism business. You can choose whether to pursue an SBA 7(a) or 504 loan based on the amount and purpose of your financing needs. SBA 504 loans are generally used for purchasing real estate or large, fixed assets, whereas 7(a) loans can be more flexible.

Common, eligible uses of loan proceeds include:

Purchasing an existing motel or land to build on
Making improvements to rooms or expanding the operation
Purchasing furniture, fixtures, equipment, etc.
Covering day-to-day operational expenses, such as payroll and utilities
Marketing
Consolidating debt

You could use SBA loans to purchase a hotel, but high costs are likely to direct you toward motels and other smaller operations instead. Such smaller accommodations often have lower operating costs that SBA loan proceeds can cover.

Applying for an SBA Loan

The process of applying for an SBA loan for your hospitality business can seem overwhelming, but it is crucial that your application is accurate and well-prepared. When determining whether to grant financing, the two key factors lenders look for are a good credit history and a profitable business. Other considerations may include:

Business plans
Financial statements
Capital that you bring to the table
Current debt

Working with our loan packaging firm can make the process smooth and stress-free. We could ensure your application is prepared properly and in a timely manner.

Grow Your Hospitality Business With an SBA Loan

SBA loans for hospitality and motels are suitable for small business owners looking to grow their businesses. Securing funding could be easier than ever with the help of BFG; we could help you understand your options and secure the financing your small business needs.