Illustrative structure · SBA 504 Green $5.5M + Bank 1st
$14.5M 110-key flagged hotel + PIP
A buyer is acquiring a 110-key hotel under a premium franchise flag. The franchisor requires a property improvement plan (PIP), and the buyer wants the PIP funded inside the same financing.
Illustrative example. Structures shown are illustrative examples of how these programs are typically arranged. They are not client testimonials or guarantees of results; actual terms vary by borrower, asset, and market. This is not a closed transaction and not an offer or commitment to lend.
Why this structure
- SBA 504 project cost can include acquisition and eligible improvements, so a PIP that is part of the plan can be financed in the same transaction.
- If the project meets SBA's energy-efficiency criteria, the debenture cap rises from $5,000,000 to $5,500,000, which matters on a project this size.
- Hotels are special-purpose property, so equity is higher than the 504 base. Lenders also look hard at flag, franchise agreement terms and cash flow after the PIP.
Typical 504 shape at this size
| Source | Amount | Share |
|---|---|---|
| Bank first lienLender of record on the first mortgage | $7,250,000 | 50.0% |
| CDC debenture (SBA 504)25-year fixed rate, second lien | $5,075,000 | 35.0% |
| Borrower equityIncludes the special-purpose property add-on | $2,175,000 | 15.0% |
| Total | $14,500,000 | 100.0% |
Debenture shown at the lesser of its share of project cost and the $5,500,000 energy-efficiency cap. A project that does not meet the criteria uses the $5,000,000 cap, and the bank or borrower carries the difference.
Program parameters used
- Energy-efficiency debenture cap
- $5,500,000Modeled assumption, reviewed 2026-10-31; confirm against the SBA SOP in effect at application.
- Standard debenture cap
- $5,000,000Modeled assumption, reviewed 2026-10-31; confirm against the SBA SOP in effect at application.
- First lien share of project
- 50%Modeled assumption, reviewed 2026-10-31; confirm against the SBA SOP in effect at application.
- Equity, special-purpose property
- 15%Modeled assumption, reviewed 2026-10-31; confirm against the SBA SOP in effect at application.
- Minimum DSCR modeled
- 1.25xModeled assumption, reviewed 2026-10-31; confirm against the SBA SOP in effect at application.
- Typical SBA timeline
- 45–75 daysAfter a complete file. Not guaranteed.
Timelines are typical ranges after a complete file and are subject to lender approval, appraisal, title, and diligence. They are not guaranteed.
How it typically unfolds
Step 1
Scope the PIP and the budget
Collect the franchisor's PIP, contractor bids and an energy-efficiency estimate if the Green cap is the goal.
Step 2
Build the project cost
Acquisition, PIP, soft costs and fees roll into one project cost that the stack is sized against.
Step 3
Package for the bank and the CDC
The bank takes the first lien and the CDC submits the debenture to SBA with the franchise agreement and operating history.
Step 4
Close and complete the PIP
The lender funds as lender of record. The franchisor's PIP deadlines and the lender's conditions both apply.
What a lender will look at closely
- Franchise agreement terms, transfer approval and PIP deadlines.
- Whether the project documents the energy-efficiency improvement SBA requires for the higher cap.
- Trailing revenue per available room and market supply, which lenders read against the flag.
- SBA's equity and eligibility rules for acquisitions, which change by SOP revision.
Have a similar property?
Other representative structures
- $2.5M 58-bed assisted livingSBA 504 refinance
- $16.8M 96-bed memory careBridge-to-HUD 232/223(f)
- $9.2M Boutique hotel → assisted livingConversion bridge · California
- $24M 120-unit ground-up apartmentsBank construction loan + C-PACE
- $2.1M 8-unit apartment purchase and rehabPrivate lender · purchase + rehab
All rates, terms, and sizing are indicative estimates for discussion only, are not a commitment to lend, and are subject to lender underwriting, appraisal, credit approval, and program guidelines in effect at application. Corin Commercial arranges loans as a licensed California real estate broker and is not the lender. Corin Commercial, Inc. · Real estate broker, California Department of Real Estate · CA DRE Corp. License #01522444 · Designated Officer: Neeli Khanna