Hotel SBA 504 Green Program
16.5 million aggregate/5.5 million per project of SBA allocation for green hotels
Here are some basic answers to common questions on this program from our clients:
- Why using SBA Green? SBA only allocates 5 million per guarantor, married couple, or affiliate (and the affiliates of the affiliate or the guarantors). Once that 5 million is exhausted, SBA green can help obtain a 5.5 million allocation for a new loan
- Is there a limit on how many SBA green loans one can obtain? Yes, as opposed to the past where one could obtain unlimited number of these loans, it is now limited to 16.5 million aggregate
- What is the maximum size of the project for this program? The project size can vary and depends on the maximum loan to cost/value the lender is willing to finance. Considering total Loan to Cost/Value of 80%. If a lender is willing to only finance 50% of the total project cost for the first loan (standard structure of these loans), with the SBA being at 30% and the allocation of 5.5 million, the total project will be $5,500,000/30% = 18.3 million where the lender finances $9.16 million, SBA funds $5.5 million, and the sponsor injects $3.66 million as equity. However, the lender may choose to lend up to 60% or higher by which increasing the project size and the lender’s loan size (the loan in the first position)
- How to start an SBA Green loan process? The project starts with an SBA certified energy engineer doing an assessment and analysis on the hotel or the construction project. The report will then be given to vendors such as solar panel retailers/contractors to obtain the total cost of acquisition and the installation. The loan will be based on the total cost including the green strategy cost from the vendor/contractor.