Can I use SBA 504 to buy a franchise hotel?

Yes. SBA 504 is commonly used for franchise hotel acquisitions (Hampton Inn, Holiday Inn Express, Comfort Inn, etc.). The franchise must be on the SBA Franchise Directory. Your total project cost including franchise fees, renovation, and working capital can be included in the 504 structure.

What is the minimum down payment for an SBA 504 hotel?

Standard SBA 504 requires 10% borrower equity. Hotels are typically classified as special-purpose properties, which may require 15% equity. New operators without hotel experience may be asked for 20%. The exact requirement depends on the lender and your hospitality track record.

How long does SBA 504 hotel financing take to close?

Typical SBA 504 hotel closings take 60-90 days from application to funding. The process involves both a conventional first mortgage lender and the CDC (Certified Development Company) for the SBA portion. Environmental review and franchise approval can extend timelines.

Can I refinance an existing hotel with SBA 504?

Yes. SBA 504 refinance is available for owner-occupied hotels with existing debt. The hotel must be at least 2 years old, you must have owned it for at least 2 years, and it must meet current SBA eligibility requirements. This is an excellent way to convert variable-rate debt to a 25-year fixed rate.

Published: March 31, 2026·Last updated: September 7, 2026·By Ed Freeman, Capital Advisor. PeerSense

What is the best financing for hotel at 85% LTV?

Owner-operated hotels qualify for SBA 504 financing at up to 85% LTV with fixed rates typically in the 6.5%–7.5% range for 25-year terms. The borrower must occupy and manage the hotel as their primary business. SBA 504 provides the highest leverage and longest fixed-rate terms available for hospitality acquisitions, requiring only 15% borrower equity.

Published by PeerSense Capital Advisory · Written by Ed Freeman, Founder

Prime: 6.75% 10-Yr Treasury: 4.78% Est. SBA 504 Range: 6.5% – 7.5% (SBA 504 fixed)as of Sep 7, 2026

Hotel

SBA 504 Hotel Owner-Occupied Financing

Owner-operated hotels qualify for SBA 504 financing at up to 85% LTV with 25-year fixed rates typically 6.5%–7.5% (SBA 504). Ideal for hands-on hospitality operators purchasing their first or next property.

Minimum 15% equity required. Hands-on hotel operators acquiring a property they will personally manage.

Talk to PeerSense Call (317) 452-6990

KEY TERMS

Deal Parameters at a Glance

LTV Target

85%

Est. Rate Range

6.5% – 7.5% (SBA 504 fixed)

Term

25 years fixed

Recourse

Full recourse (personal guarantee)

DSCR

1.20x minimum

Closing Speed

60-90 days

Min Loan Size

$10 million and up

Loan Products

SBA 504

Indicative only, as of September 1, 2026. Not a quote, commitment or offer of credit. Final pricing, leverage and terms are determined by the lender at underwriting, after full transaction materials are reviewed. PeerSense sources the file. The lender sets pricing. What these terms mean.

FIT ASSESSMENT

When Is This the Right Fit?

SBA 504 is the right choice when you are purchasing a hotel you will personally operate and manage. The 85% LTV allows you to acquire with minimal equity, and the 25-year fixed rate provides payment certainty that is unavailable in conventional hotel lending. This is particularly powerful for first-time hotel buyers who want to preserve cash for renovations or working capital. If you are a passive investor or plan to hire a third-party management company, you will not meet the SBA owner-occupancy requirement and should consider CMBS or conventional financing instead.

Want the full program overview, current rate sheet, and underwriting matrix? See the SBA Loans guide →

ADVANTAGES

Key Benefits

Up to 85% LTV, only 15% borrower equity required

25-year fully amortizing fixed rate eliminates balloon and rate risk

Below-market rates compared to conventional hotel loans

Fixed monthly payments simplify cash flow management

Build equity in your hotel from day one instead of paying rent or franchise fees

ALTERNATIVES

Strategic Alternatives

65% LTV Hotel Refinance After PIP

If you are an investor (not owner-operator) seeking non-recourse terms

Learn more

Bridge-to-CMBS Hotel Acquisition

If the hotel needs renovation before stabilization

Learn more

Franchise SBA Acquisition Financing

If you are purchasing a branded franchise hotel (e.g., Hampton Inn)

Learn more

Frequently Asked Questions

The borrower must occupy and operate the hotel as their primary business. Unlike traditional owner-occupancy requirements (51% of space), hotels are evaluated based on operational control. You must be the day-to-day operator, not a passive investor with third-party management.

See Related Rates by Program

PeerSense covers the full commercial capital stack. Indicative levels that lenders in our network have been pricing across these programs, as of September 1, 2026.

Originator warehouse

$100M a month

Focus $100 million a month. Will look at $10 million a month. $10 million is not the focus.

See current rates

Invoice Factoring

0.5–3.5% / 30d

B2B invoices from $20 million a month. Advance 80 to 95 percent of face.

See current rates

CMBS Conduit

5.60–7.10%

10 year Non Recourse fixed, $10 million and up, fully assumable

See current rates

Bridge Loans

9.00–14.00%

$10 million and up. Cash in about 35 percent. Name the takeout first.

See current rates

Data Center

CRS to 89%

$1 billion to $30 billion plus. Signed or guaranteed hyperscaler lease.

See current rates

Contracted revenue sale

Up to 89%

15 year lease signed or guaranteed by a hyperscaler. Size follows the lease.

See current rates

Hotel Financing

Hotel is search only. Public floor $10 million and up. Cash in about 35 percent.

See current rates

Private Credit

7.80–18.00%

Non-bank flexibility. Public CRE floor $10 million and up.

See current rates

DSCR Investor

Search path. Public CRE floor $10 million and up.

See current rates

Connect with PeerSense, Direct Capital Advisory

PeerSense pre-underwrites every deal before presenting it to our institutional capital sources. With a curated network of lender relationships and live market rate intelligence, we match your hotel deal with the right capital source, right now.

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Fee at closing only · Complimentary initial consultation

Published by PeerSense Capital Advisory · Written by Ed Freeman, Founder. Updated September 2026.

Disclaimer: The information on this page is provided for educational purposes only and does not constitute financial, legal, or investment advice. Rates, terms, and availability are subject to change based on market conditions, property characteristics, and borrower qualifications. The rate ranges cited reflect approximate market pricing as of September 2026 and may not reflect current conditions at the time of reading. PeerSense sources capital through a curated network of commercial lenders and capital sources. All financing is provided by third-party lenders subject to their own underwriting criteria and approval processes. Borrowers should consult with qualified financial and legal professionals before making any financing decisions.