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Motel Loans and Motel Lenders
Motel loans are a difficult property type to finance primarily due to a limited pool of
potential lenders. Loan programs, guidelines, and pricing vary widely among the relative small pool of commercial mortgage sources depending on many factors; such as loan size, age of subject property, town population, historical financial performance, experience of the borrower, etc. Motel lenders appetite for this industry fluctuates widely as well, as the industries come in and out of favor more than with typical building typesthis .
Conventional Motel Loans
We have access to some of the best programs in the market. Loan to values on conventional programs can still go as high as 70% on rate and term refinances and up to 65% on cash out refinances.
- Loan to Value up to 70% of appraised value
- Cash-out up to 65% of appraisal value
- Fixed periods from 3, 5, 7, 10 and 25 years.
- Loan amounts from $400,000 - $5,000,000
The 504 and 7A loan programs, which are guaranteed through the SBA provides some of the most viable options for motel loans in the industry. Note that it is possible to refinance a motel via the 7a program despite what you might have heard. The primary benefit of the 504 program is twofold, high leverage (85% LTV), long term, fixed rate financing. The 7a program is geared towards smaller loans, generally under $2 million, and provide 85% financing on purchases and 80% on refinances. Note that we offer a 5 year fixed SBA 7a loan.
Loan Structures
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Financing available on projects up to $10,000,000
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Bank financing typically provides a first mortgage of up to 50% of the total project cost. This loan can range from $500,000 to $6,000,000.
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The SBA, through a Certified Development Company (CDC) provides up to
35% of total project cost in a second lien position. This loan can range from $300,000 to $2,000,000.
Terms and Interest Rates
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First Mortgage - up to 25-year term on your purchase with fixed and variable interest rates available.
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Second Mortgage - up to 20-year term for real estate. Fixed rate is determined at SBA guaranteed 504 debenture sale
Fees
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First Mortgage - fees are always market competitive.
Second Mortgage - approximately 2.75% + legal review fee. This fee is financed in the loan
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Fees also include customary closing costs, such as appraisal & environmental report, construction loan fees (if applicable), and bridge loans.
Motel Loan Eligibility
Eligibility, pricing and loan programs boil down to the following:
- Management Experience
- Cash Flow Coverage (normally need a 1.3 dcr on motels)
- Equity Injection (cash down of 15%)
- Location of prospective Hotel
- Personal Credit Score (normally like to see a minimum of 620)
- Total amount financed
Get real answers now on your motel mortgage by taking a few minutes to fill out the commercial loan application.
Other Commercial Real Estate Loan Organized By Building Type:
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