SBA Motel Financing

For the past few years motels have been tougher to finance than hotels.  Up until recently, all but the strongest hotel loans were being approved and motels – unless they were in resort areas and had some very strong borrowers and/or financials – were largely being ignored.

The majority of  hotel financing deals done over the last few years have been for the purchase or refinance of a hotel with a good flag.  However, as we get further from the recession the motel and hotel lending environment is changing for the better and more lenders have money to lend – especially if the loan qualifies for SBA or USDA financing.

This is not to say that it is easy (and not to say that it isn’t),  because every deal is a little different, but just saying “motel” to a lender is no longer met with a sigh like it has been for the past few years.  More and more often you will hear a lender say “tell me more.”

Independent Motels Are Finance-able

Why are motels harder?  Well, the argument has always been that they are typically smaller, older, have exterior corridors, might be in less desirable areas, have “mom and pop” owners who might not have the personal net worth that you would see with the groups of investors/borrowers who might be purchasing a Hampton Inn.

And they sure don’t have the big bucks marketing that the big chains have.

These are all valid points, but there are many, many successful motels with great reputations and decent financials owned by good “mom and pop” owners/operators that are eligible for loans.  As they say, the devil is in the details, so if you own a motel (or want to) and the property you are looking to finance has decent financials AND you have good industry experience then you have a good shot at financing.

Similarly, if you have a project that is more of a turnaround, but you have the right management team and a decent amount of equity then you also have a good shot at financing.

Each scenario is different and there are certainly other scenarios where motel financing is available, so don’t assume it can’t be done until you speak with a knowledgeable SBA broker or lender.

Please contact me if you need assistance with motel financing: jking (at) green commercial capital (dot) com or 1-800-414-5285.

You can also visit the hotel and motel financing page of our main site here for additional details.