Hotels (except Casino Hotels) and Motels
721110
The Bank of Missouri (MO)
Take advantage of various competitive personal and business deposit accounts and loans that are offered by The Bank of Missouri. Visit our website today.
Redwood CU (CA)
Redwood Credit Union has been a trusted, and community focused credit union since 1950. We offer banking services to anyone in the North Bay/SF area.
Pinnacle Bank (SC)
Personal Banking
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Growth Capital Corp. (OH)
Since 1982, we have provided more than $550 million in Ohio small business loans. We are the #1 SBA 504 lender in the State of Ohio.
FNBC Bank (AR)
First National Bank of Omaha (NE)
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First Mid Bank & Trust, National Association (IL)
First Mid Bank & Trust offers commercial & personal banking, insurance, & wealth management services throughout Illinois, Missouri, Texas & Wisconsin.
SBA Loans for Hotels and Motels: Financing Growth in the Hospitality Industry
Introduction
Hotels and motels provide lodging services to business travelers, tourists, and local guests, making them a critical part of the U.S. hospitality industry. Classified under NAICS 721110 – Hotels (except Casino Hotels) and Motels, this sector includes independent inns, boutique hotels, and national chains offering accommodations and related services. While demand for lodging continues to grow with increased travel and tourism, hotel and motel operators face major financial challenges such as property upkeep, staffing, seasonal fluctuations, and high operating costs.
This is where SBA Loans for Hotels and Motels come in. Backed by the U.S. Small Business Administration, SBA loans provide affordable financing with longer repayment terms, lower down payments, and government-backed guarantees. These loans help hotel owners refinance debt, renovate facilities, expand capacity, and stabilize cash flow during low occupancy periods.
In this article, we’ll explore NAICS 721110, the financial struggles hotel and motel operators face, how SBA loans provide solutions, and answers to frequently asked questions from hospitality business owners.
Industry Overview: NAICS 721110
Hotels and Motels (NAICS 721110) provide short-term lodging services and may also offer:
- Restaurants, bars, and foodservice operations
- Conference and meeting facilities
- Fitness centers, spas, and recreational amenities
- Business services and concierge support
- Parking, shuttles, and guest transportation
The hospitality industry is highly competitive and dependent on location, guest satisfaction, and occupancy rates. Operators must continually reinvest in facilities and services to remain competitive.
Common Pain Points in Hospitality Financing
From Reddit’s r/hospitality, r/Entrepreneur, and Quora discussions, hotel and motel owners often highlight these challenges:
- High Operating Costs – Utilities, staffing, and maintenance consume a large portion of revenue.
- Seasonal Cash Flow – Occupancy fluctuates based on travel seasons, events, and economic conditions.
- Property Renovations – Guest satisfaction depends on updated rooms and facilities.
- Debt Burdens – Many operators struggle with large mortgages or refinancing needs.
- Competition – Online booking platforms and alternative lodging options increase market pressure.
How SBA Loans Help Hotels and Motels
SBA financing provides flexible capital to improve facilities, manage operations, and expand services to attract and retain guests.
SBA 7(a) Loan
- Best for: Working capital, payroll, marketing, or debt refinancing.
- Loan size: Up to $5 million.
- Why it helps: Provides liquidity to cover expenses during low-occupancy seasons and fund upgrades.
SBA 504 Loan
- Best for: Real estate purchases and large renovations.
- Loan size: Up to $5.5 million.
- Why it helps: Ideal for buying property, renovating rooms, or expanding hotel capacity.
SBA Microloans
- Best for: Small inns or boutique motels.
- Loan size: Up to $50,000.
- Why it helps: Useful for furniture, décor, or launching a marketing campaign.
SBA Disaster Loans
- Best for: Hotels impacted by natural disasters, pandemics, or economic downturns.
- Loan size: Up to $2 million.
- Why it helps: Covers recovery expenses, lost revenue, and facility repairs.
Step-by-Step Guide to Getting an SBA Loan
- Check Eligibility – Must be a U.S.-based, for-profit hospitality business with good personal credit (typically 650+).
- Prepare Financial Documents – Tax returns, P&L statements, occupancy reports, and payroll records.
- Find an SBA-Approved Lender – Many lenders specialize in hospitality and lodging financing.
- Submit Application – Provide a business plan with occupancy strategies, guest service improvements, and marketing goals.
- Underwriting & Approval – SBA guarantees reduce lender risk. Processing typically takes 30–90 days.
FAQ: SBA Loans for Hotels and Motels
Why do banks often deny loans to hotel operators?
Banks may consider hotels risky due to seasonal revenue, high operating costs, and reliance on occupancy rates. SBA guarantees reduce this risk and increase approval chances.
Can SBA loans fund property renovations?
Yes. SBA 7(a) and 504 loans can finance room upgrades, lobby renovations, and amenity improvements.
What down payment is required?
SBA loans usually require 10–20% down, compared to 25–30% with traditional loans.
Are startup hotels or motels eligible?
Yes. Startup properties with strong management teams and a clear business plan may qualify for SBA financing.
What repayment terms are available?
- Working capital: Up to 7 years
- Equipment/renovations: Up to 10 years
- Real estate: Up to 25 years
Can SBA loans support expanding into multiple locations?
Absolutely. Many hotel operators use SBA loans to purchase additional properties or expand their brand into new markets.
Final Thoughts
The Hotels (except Casino Hotels) and Motels sector is vital to the U.S. hospitality industry but faces significant financial challenges tied to property upkeep, seasonal occupancy, and competitive pressures. SBA Loans for Hotels and Motels provide affordable financing that enables operators to renovate, expand, and stabilize operations.
Whether you’re running a small boutique inn or a multi-location motel chain, SBA financing can provide the resources you need to succeed. Connect with an SBA-approved lender today and explore your options for funding growth in the hospitality industry.
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