SBA rules · SOP 50 10 8.1

Can an SBA loan finance a hotel or motel?

Yes, an SBA 7(a) or 504 loan can be used to finance a hotel or motel, provided it satisfies SBA's transient occupancy requirements.

Quoted from SBA SOP 50 10 8.1Every quote checked word for word

In detail

Transient occupancy threshold: More than 50% of the business's revenue for the prior year must be derived from transients who stay for 30 days or less at a time, and the property must comply with all zoning and legal requirements. For start-up businesses, financial projections must show that more than 50% of revenue will come from transients staying 30 days or less.
504 borrower contribution: Under the 504 program, hotels, motels, and other lodging facilities are classified as Limited or Special Purpose Properties, which requires an increased borrower equity contribution of at least 15%, or at least 20% if the project also involves a new business.
Export program restrictions: Small businesses in NAICS Industry Subsector Code 721 (Accommodation) are ineligible for Export Express and Export Working Capital Program (EWCP) loans, but may be financed under other 7(a) programs.

The source

What the SOP says

“Hotels, motels, recreational vehicle parks, marinas, campgrounds, or similar types of businesses are eligible if more than 50% of the business’s revenue for the prior year is derived from transients who stay for 30 days or less at a time and the business complies with all zoning and other legal requirements.

SOP 50 10 8.1, Chapter 1: Primary Applicant Eligibility Requirements > Note (lines 423-431)✓ Verified

“If the Applicant is a Start-Up Business, the Applicant’s projections must show that more than 50% of the business’s revenue will be derived from transients who stay for 30 days or less at a time.

SOP 50 10 8.1, Chapter 1: Primary Applicant Eligibility Requirements > Note (lines 423-431)✓ Verified

“Hotels, motels, and other lodging facilities;

SOP 50 10 8.1, Chapter 1: Eligibility through Submission of Application > Businesses with a Limited or Special Purpose Property: (lines 3447-3479)✓ Verified

“Must contribute at least 15%, in which case the Debenture will finance no more than 35% of the Project and at least 50% of the Project financing will be from banks or other financial institutions, state or local government, or foundations or other non-profit institutions.

SOP 50 10 8.1, Chapter 1: Eligibility through Submission of Application > Businesses with a Limited or Special Purpose Property: (lines 3447-3479)✓ Verified

“Must contribute at least 20%, if the Project involves a new business 13 CFR § 120.910.

SOP 50 10 8.1, Chapter 1: Eligibility through Submission of Application > Businesses with a Limited or Special Purpose Property: (lines 3447-3479)✓ Verified

“small businesses in the following NAICS Industry Subsector Codes cannot be financed using an Export Express Loan, but may be financed using other SBA 7(a) financial assistance:

SOP 50 10 8.1, Chapter 5: 7(a) Export Trade Finance > Other Restrictions that apply to Export Express Loans (lines 2389-2390)✓ Verified

“small businesses in the following NAICS Industry Subsector Codes cannot be financed using an EWCP loan, but may be financed using other SBA 7(a) financial assistance: NAICS Industry Subsector Code 721 (Accommodation).

SOP 50 10 8.1, Chapter 5: 7(a) Export Trade Finance > Ineligible NAICS Codes (lines 2561-2564)✓ Verified

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