Hi all, is anybody here familiar with SBA financing for hotels? Is there a minimum stay requirement? Wondering is SBA can work for a furnished short term rental hotel product where the number of days occupied will be a little different from a regular hotel. Thank you!
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I've done a few in a past life. I've never heard of a "minimum stay requirement" and I would really question why that would be required for a hospitality product, since so much of their business is 1-5 nights (Think a business traveler or weekender)
Your description; "furnished short term rental hotel product" almost sounds like a SRO, which may be underwritten differently than a standard flagged hotel/motel, though. Underwriting requirements at the lender level may be different, but in terms of the SBA Program, I would say no.
Thank you! and the project is an extended stay type hotel but not flagged with the extended stay brand. Demand drivers will come from a nearby hospital/doctors in training and also from companies in the area with short term internships. Its fully furnished. Do you think there is a maximum or average stay requirement of 30 days? That would really hurt the project as there are people wanting to stay there for longer than 30 days but less than a year.
There is a maximum stay requirement, since the sba doesn’t want to be subsidizing landlords.
Thank you!, Could you explain a bit on the maximum stay requirement? A similar extended stay type product in the area has people staying there (mainly doctors in training) for a minimum of six months. Will that be a problem for SBA financing? Do you think there is a maximum or average stay requirement of 30 days? That would really hurt the project as there are people wanting to stay there for longer than 30 days but less than a year. Really appreciate your help!
I’m not sure but I vaguely remember is that the work around is that tenants aren’t allowed to sign rental agreements longer than 29 days or something, so those that stay longer roll over the agreement every month.
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