🏨 SBA Financing for STR Hotels & Motels: The Smart Way to Scale Your Hospitality Portfolio 💼

💰 How SBA Loans Help Investors Buy or Refinance STR Hotels & Motels 🏩

SBA Financing for STR Hotels and Motels: The Smart Way to Scale Your Hospitality Portfolio

Short-term rentals (STRs), boutique hotels, and roadside motels are seeing renewed investor interest across the U.S. — especially in fast-growing regions like Texas, Florida, and Arizona. With more travelers opting for local experiences over big-brand stays, small-scale hospitality operators are turning to SBA financing to fund purchases, renovations, and conversions.

At Medallion Funds, we help borrowers navigate the SBA 7(a) and SBA 504 loan programs — both powerful tools for financing owner-operated hospitality properties.

Why SBA Financing Works for Hotels and Motels

Unlike traditional bank loans, SBA loans are partially guaranteed by the federal government, allowing lenders to offer:

·Lower down payments (as low as 10%)

·Longer amortization (up to 25 years)

·Competitive fixed or variable rates

·Flexible qualification standards

These advantages make SBA loans ideal for operators who manage or live on-site at smaller independent hotels, motels, or STR properties.

SBA 7(a) vs. SBA 504: Which One Fits Your Property?

SBA 7(a) Loan

·Great for property acquisitions, renovations, or business purchases

·Up to $5 million in financing

·Includes working capital and FF&E (furniture, fixtures, and equipment)

·Allows for mixed-use operations (like a motel with short-term rental units)

SBA 504 Loan

·Designed for real estate and equipment purchases

·Typically used for expansion or construction

·Up to $15 million with combined lender and CDC participation

·Fixed-rate, long-term financing with lower equity requirements

👉 Pro tip: Many investors use the 504 program for real estate and the 7(a) for business assets — a blended strategy that maximizes leverage and minimizes equity outlay.

What Properties Qualify for SBA Hotel Financing?

To qualify, the property must be owner-occupied (at least 51%) and actively managed. Eligible property types include:

·Boutique hotels and independent motels

·Short-term rental (STR) portfolios

·Bed-and-breakfasts

·Vacation lodges and cabins

·Small hospitality franchises

Hotels and motels with on-site operations — even with STR units — can meet SBA’s “owner-operator” rule if management is hands-on or through a closely held company.

Key Benefits for Investors and Operators

✅ Low down payment = higher leverage
✅ Long repayment terms = better cash flow
✅ Business expansion = new market entry or renovation funding
✅ Tax advantages through depreciation and expense write-offs
✅ Eligibility for fee waivers for certain NAICS hospitality codes (subject to SBA updates)

Example Scenario

A husband-and-wife team operates a 20-unit roadside motel in Central Texas and wants to convert half the rooms into short-term rental suites. Using the SBA 7(a) program, they secure 90% financing, including funds for renovations and furnishings — boosting nightly rates and overall property value within one year.

Partner with Medallion Funds

At Medallion Funds, we specialize in SBA hospitality financing for:

·STR property conversions

·Boutique hotel acquisitions

·Motel renovations and refis

·New hospitality construction loans

Whether you’re a first-time operator or an experienced investor, we guide you through underwriting, business plan preparation, and lender matching — saving you time and money.

📞 Schedule a consultation today at BillRappOnline.com to learn how SBA financing can power your next hospitality investment.

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© 2023-2024 Bill Rapp, Medallion Funds LLC, Director of Capital Advisory