Memphis hotel financing for commercial property investors is something that we at Proactive Lending Group specialize in, from beginning to end. We not only understand the nuts and bolts of hospitality financing, but also the needs and concerns of commercial real estate investors.

Pro-Active Lending Group is proud to offer a number of creative solutions for hotel financing. For those unfamiliar, the most common kinds of hotel financing are generally available in various forms, including conventional commercial bank loans, SBA 7(a) loans, SBA 504 loans, and USDA B&I loans. However, we have other options and avenues to secure commercial hospitality financing … to speak with an experience lender, simply pick up the phone and give us a call today!

Hotel Financing in Memphis by Proactive Lending

Memphis is full of businesses that started small and grew into something bigger, thanks to their loyal customer following and the supportive business environment that Memphis provides with an ever-increasing emphasis on growth. Locally owned businesses are a cornerstone of Memphis culture, and we welcome new entrepreneurs every day. Here are a few resources to help you get hotel financing in Memphis.

The Thriving Market and Hotel Financing Loans in Memphis

The demand for hotel rooms has been increasing for nine years, keeping pace with the robust US economy. In 20122, hotel occupancy increased by 0.5 percent year-on-year to 66.2 percent, setting the fifth consecutive record for the sector. Therefore, one of the commercial real estate markets where owners can still make a profit is the hotel industry. The availability of bank hotel financing for commercial real estate in Memphis has decreased over the past few years, and owners may have trouble locating affordable financing.

When owners try to lock in a reasonably low long-term interest rate on an asset, timing can mean the difference between success and failure. Getting a loan from a seasoned hotel lender network like ours with knowledge of SBA 504 loans is the tried-and-true solution. If you know where to look, capital is available to help you meet your short- and long-term financing objectives.

SBA 504 loans

SBA 504 loan offers advantages that are unmatched by any other. Borrowers may benefit from all the SBA 504 program’s numerous advantages for buildings older than two years, including loans with an 85% LTV (loan-to-value ratio), a low fixed rate, and terms of up to 25 years available. The SBA assumes the risk of default on a portion of the loan, allowing for a much higher LTV than any typical commercial property mortgage. The only uses for SBA 504 loans are to buy already-existing hotels, buy and renovate hotels, and refinance existing loans.

Some properties when considered for hotel financing in Memphis are designated as “special purpose” properties by the SBA. It states that a special purpose property is “appropriate for one use or limited use: a building that cannot be converted to another use without a large capital investment” and mandates a 15% down payment for 504 loans. Additionally, borrowers cannot refinance an existing SBA loan or another government loan through the SBA 504 program.

SBA 7(A) Loans

The good news is that specialized lenders are eager to lend to hotels and motels outside the traditional lending markets. The market is being dominated by SBA 7(a) financing for projects costing less than $5.0 million. Through a partial guarantee from the US government, the SBA 7(a) program lowers the risk of loss for the lender. 

Another crucial benefit of this government hotel financing guarantee in Memphis is that it enables the lender to fund a portion of the loan through secondary market investors rather than relying solely on local depositors. Here are a few examples of standard SBA 7(a) loan conditions for hotels and motels:

  • Loan Amount: $500,000 to $5.0 million
  • Loan Purpose: Purchases; refinances to reduce interest rates or monthly payments; refinances with new funds for renovations and new construction.

Loans on real estate and land used for either new construction or the purchase of existing structures have a maximum maturity of 25 years. The loan terms for working capital and equipment are 10 years.

The Best Loan Options for Hotel Financing in Memphis with Proactive Lending

Proactive Lending Group is pleased to provide various innovative hotel financing options in Memphis. For those who are unfamiliar, the most popular forms of hotel financing typically come in different shapes and sizes, including conventional commercial bank loans, SBA 7(a) loans, SBA 504 loans, and USDA B&I loans. However, we have additional choices and channels for obtaining commercial hospitality financing. Call us if you’d like to speak with a knowledgeable lender.



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