How does SBA treat buying a hotel or self-storage business?

SOP 50 10 8.1, Appendix 15, treats these as owner-occupied Special Purpose Property deals when the property cannot be separated from the business. Its examples are storage units and hotels where the real estate fully secures the loan.

What changes

• Maturity: up to 25 years in a single loan if 85% or more of total project costs are real estate (Para. B.1.a).
• Repayment test: if the appraised value fully collateralizes the loan, the lender may rely on projections. The required coverage must be met within two years of funding (Para. C.2.b).
• No Quality of Earnings report is required, regardless of price.

What still applies

• A business valuation is required, allocating separate values to land, building, equipment and intangibles (Para. C.1.a).
• The Certified General Real Property Appraiser must have completed at least four going concern appraisals of equivalent property in the last 36 months.
• The lender must still calculate historical coverage and explain any variance from the projections.
• Projected coverage may not include rental income from the property.
• The equity and seller rules for the deal category still apply.

An eligibility check for lodging

Hotels and similar businesses need more than 50% of prior-year revenue from guests staying 30 days or less (Section A, Ch. 1, Para. E).

The SOP names no other property types in this passage. Ask your lender whether yours qualifies.