SBA Hotel Equity Injection: 7(a) and 504
Equity injection is lender and CDC underwriting. Hotels are special-purpose. PeerSense does not set a typical down.
Equity injection is lender and CDC underwriting. Hotels are special-purpose under SBA guidelines. PeerSense does not set a typical down. 7(a) versus 504 is deal-dependent: 504 is a two-note bank-plus-CDC structure on real estate and FF&E; 7(a) is a single-lender loan that can bundle acquisition, working capital, and PIP. Tell us about the deal.
SBA 504 Hotel Equity
SBA 504 is a three-party structure: bank first note, CDC SBA-backed second note, and sponsor equity. The equity injection is lender and CDC underwriting. Hotels are special-purpose under SBA guidelines. PeerSense does not set a typical down.
The CDC portion is fixed for 20-25 years. That payment stability is why operators use 504 on hotel real estate when the deal fits. Tell us about the deal.
SBA 7(a) Hotel Equity
SBA 7(a) is a single-lender loan up to $5M. Equity injection is lender underwriting. PeerSense does not set a typical down.
7(a) can bundle working capital, PIP, equipment, and real estate in one loan. Rate is variable. For smaller deals with PIP or working-capital needs, 7(a) is often the cleaner close. Tell us about the deal.
Seller Financing
Whether a seller note counts toward equity is lender and SBA underwriting. Standby, subordination, and term are reviewed on the deal. Do not count on a seller note until the lender and CDC have sized it.
Tell us about the deal, including any proposed seller paper.
Other Equity Sources
Cash, documented family gifts, retirement rollovers, home equity, and pledges of other assets are reviewed as lender and SBA underwriting. Unsecured borrowing against the hotel itself is a common kill. ROBS and similar structures need CPA guidance.
PeerSense does not set a typical down. Capture the source on the form. Tell us about the deal.
The PeerSense Match
PeerSense matches owner-operator hotel acquisitions to 7(a) or 504 based on the deal: size, PIP, working capital, hold horizon, and sponsor capital. Equity injection is lender and CDC underwriting. Hotels are special-purpose under SBA guidelines. PeerSense does not set a typical down. Tell us about the deal.
Questions About This Topic
How much down payment do I need for an SBA hotel loan?+
Equity injection is lender and CDC underwriting. Hotels are special-purpose under SBA guidelines. PeerSense does not set a typical down. Tell us about the deal.
Can seller financing count as SBA down payment?+
Whether a seller note counts toward equity is lender and SBA underwriting. Structure depends on the deal, the CDC, and current SBA rules. Tell us about the deal.
What sources of equity does SBA accept?+
Acceptable equity sources are lender and SBA underwriting. Cash, documented gifts, retirement rollovers, and other sources are reviewed on the deal. PeerSense does not set a typical down. Tell us about the deal.
Which SBA program gets the lowest hotel down payment?+
7(a) versus 504 is deal-dependent. Equity injection is lender and CDC underwriting. Hotels are special-purpose under SBA guidelines. PeerSense does not set a typical down. Tell us about the deal.
Editorial integrity: Published by PeerSense Capital Advisory · Written by Ed Freeman, Founder. PeerSense sources capital through a curated network of commercial lenders and capital sources. Content is for educational purposes and does not constitute financial, legal, or tax advice. Rates and terms cited reflect market conditions at the published date and may not match current quotes. Consult a qualified professional for transaction specific guidance.