CHLA Lodging News Sept/Oct 2019

www.calodging.com September/October 2019 11 Expand Your Hotel Financing Options with the SBA 504 Loan Program By Kurt Chambliss, Executive Vice President, TMC Financing FOR THE PAST 10 YEARS, hoteliers have been quick to recognize and take advantage of the booming hospitality industry. Demand has been on the rise with no signs of slowing, making entrepreneurs eager to join the industry and veterans eager to expand. While the industry is predicted to continue to flourish, the long-awaited peak in the market is inevitable. The hotel construction market has “normalized,” according to analysts, making lenders more cautious. However, there is still plenty of opportunity for growth, particularly in California. As this new normal emerges, hotel owners seeking financing to purchase, renovate or build hotel properties are finding the SBA 504 an advantageous solution. The SBA 504 Advantage The SBA 504 Program was created by the Small Business Administration to help small business owners purchase fixed assets that will help expand their business. Fixed assets include real estate, equipment and furnishings; however, the loan also covers construction costs, renovations, and can be used towards cash out refinancing. Features of the 504 loan that are particularly attractive to hotel owners include: f f Below-market FIXED interest rates with payments fully-amortized over 25 years, with no balloon payment. July’s 25-year rate is 4%. f f As low as 15% down payment. f f No project maximum. f f No additional collateral required. f f Franchised or independent hotels qualify. f f Versality of funds. Funds can be used to purchase land or buildings, construct or upgrade buildings, purchase large equipment and furnishings, and even to refinance commercial mortgages with cash out. continues  