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Best business loans for hotels and motels in 2026
The best financing for most hotels and motels is an SBA 504 or SBA 7(a) loan, because a hotel is owner-occupied real estate and both programs offer long terms. A commercial real estate loan fits larger or investor-held properties, and a line of credit covers the off-season. Hospitality lending is specialized, so expect lenders to ask for industry experience.
By the WithFunded team · Published November 11, 2026 · Rates as of November 2026
The short list
- Best for buying or building a property
- SBA 504 loan
- Best for a purchase with renovations
- SBA 7(a) loan
- Best for larger or multi-property owners
- Commercial real estate loan
- Best for the off-season
- Business line of credit
The 4 best options, ranked
1. SBA 504 loan Best for buying or building a property
A hotel is real estate first. The 504 structure pairs a bank loan with a low fixed-rate CDC loan on terms of up to 25 years.
Watch for: Only for fixed assets. It cannot fund payroll, inventory, or other working capital. SBA loan guide →
2. SBA 7(a) loan Best for a purchase with renovations
A 7(a) loan can combine the property, furniture and fixtures, and working capital in one loan, which suits an acquisition that needs upgrades.
Watch for: Heavy documentation, and the timeline rules it out for anything urgent. SBA loan guide →
3. Commercial real estate loan Best for larger or multi-property owners
Properties beyond SBA size limits, or owned by investors, are financed conventionally against the property's income.
Watch for: Appraisal, environmental review, and closing add both time and cost. Commercial real estate guide →
4. Business line of credit Best for the off-season
Occupancy is seasonal in most markets, but staff, utilities, and franchise fees are not. A line covers the low months.
Watch for: Some lenders add draw or maintenance fees, and a limit can be cut at renewal. Business line of credit guide →
Side-by-side comparison
| Option | Verdict | Cost basis | Funding speed | Qualifies on |
|---|---|---|---|---|
| SBA 504 loan | Best for buying or building a property | CDC portion roughly 6.6% on 10 to 25 year terms | Weeks to months | Owner-occupied real estate or major equipment, plus a down payment |
| SBA 7(a) loan | Best for a purchase with renovations | Capped at 10.00%–13.50% by loan size (prime plus the SBA maximum spread) | Weeks to months | Generally stronger credit and two or more years in business |
| Commercial real estate loan | Best for larger or multi-property owners | Conventional pricing varies by property and borrower; long amortization | Weeks to months | A stronger profile and a down payment; the property is the collateral |
| Business line of credit | Best for the off-season | Representative 8%–30% APR, charged only on what you draw | Often days | Revenue, time in business, and credit |
What it costs
SBA 7(a) rates are capped at prime plus a maximum spread that shrinks as the loan grows. At the current 7.00% prime rate, these are the highest payments a lender could charge on a 25-year term:
| Loan amount | Maximum rate | Monthly payment at the maximum |
|---|---|---|
| $500,000 | 10.00% | $4,544 |
| $1,500,000 | 10.00% | $13,631 |
| $3,000,000 | 10.00% | $27,261 |
Payments at the SBA maximum variable rate for each size tier. Many borrowers qualify below the maximum. Source for rate caps: U.S. Small Business Administration. WithFunded calculation.
What lenders look at
- Occupancy, average daily rate, and revenue per available room over several years.
- The franchise agreement and any required property improvement plan.
- Your hotel operating experience, which weighs heavily in hospitality lending.
Mistakes to avoid
- Underestimating a brand's property improvement plan. Get the cost in writing before you close.
- Using short-term money for renovations that take a year to pay back.
Frequently asked questions
- Can you buy a hotel with an SBA loan?
- Yes. Hotels and motels are eligible for both SBA 7(a) and 504 loans as owner-operated businesses. Lenders typically want hospitality experience and a down payment.
- How much down payment does a hotel loan need?
- It varies by program and lender. SBA 504 can require as little as 10% on qualifying projects, though special-purpose properties such as hotels often need more.
- What is a property improvement plan?
- It is the list of upgrades a hotel brand requires, often when a property changes hands. It can be a large cost, and lenders will want it included in the financing plan.
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How we ranked these options
This guide ranks types of financing, not individual lenders. Each option is ordered by how well it fits the need described on this page, judged on four things in this order: whether the structure matches how the money will be used and repaid, total cost, funding speed, and how hard it is to qualify. Cost figures are WithFunded calculations from published rate inputs as of November 2026: the bank prime loan rate from the Federal Reserve, the SBA maximum-rate schedule, and Federal Reserve survey data. The method follows our 2026 SMB Financing Cost Report, whose own figures use June 2026 rates.
WithFunded is a financing marketplace, not a lender. Our 2-minute form suggests a product type from the families we cover, and a funding partner reviews the request. Not every structure named in this guide is available through WithFunded: options such as SBA microloans, USDA farm loans, bank loans, and seller financing are ones you would pursue directly with the provider. They are listed because leaving out a good fit would make the ranking less useful.
Related guides
The top-ranked option on this page is SBA 504 loan because it fits the most common version of this need. Your own best fit depends on your revenue, time in business, credit, and how fast you need the money.
Disclaimer. WithFunded and Big Think Capital are a financing marketplace; we are not the direct lender and do not guarantee funding, approval, rates, or terms. Everything on this page is a representative example only — not an offer or a commitment to lend, and not financial advice. Actual rates, fees, payments, and terms are set by the funding lender and depend on your business, credit, and the product. Where required by state law, the lender provides cost-of-financing disclosures before any agreement is signed.