Regarding Loans hotel, which is better or the SBA 504 SBA 7?

First of all, most hotel owners Vai SBA programs because of the relatively high level of funding available. Both the seventh SBA 504 and SBA 85% loan to enable the cost of financing, allowing owners to keep as much money for their activities as possible. Conventional financing is currently limited to approximately 65% ​​of the loan to value on purchases, as a comparison.

So, that is most appropriate for your situation?

Traditionally, the seventh is reserved for occasions of under $ 2 million, while the 504 will go up to $ 7,000,000. However, the lines are blurred. The bank structure 504 is starting at $ 1,000,000 and there are some that will bring up seventh at $ 3,000,000.

Although both programs are guaranteed to the bank by the Small Business Administration loan structures are very different. For example, the 504 is set as 2 loans. The first loan position of privilege is the piece Bank. Are normally formed like a 5 or 10 years fixed with an amortization of 20-25 years is 50% loan to value. The second loan position of privilege is the piece that CDC is fixed at 20 years old, 20-year amortization of the loan usually 35% of the loan to value. The interest rate mix of the 2 is currently on loan at 7% 's, more than 6%' s.

The seventh in contrast is a SBA loan that is guaranteed for 75% of the balance by the SBA in the event of default by the debtor. And 'set as a complete 25-year amortization, with a variable rate (in most cases, we work with some offering this as a fixed 5 years). One of the biggest complaints of the seventh is the SBA guarantee fee of 2.75%, 75% of the total loan amount. Keep in mind though that this may be negotiable. There are some banks that will pay this tax from their yield spread if they like your loan application. The rate is currently about 1% or more first down by 6% s'.

Also in this case, the 504 is normally associated with the amounts of loan and offers the greatest long-term funding at a fixed rate. While the seventh is designed for smaller deals with a variable rate (although there are banks that offer this as a loan amortization fixed/25 years 5 years).

Another important detail is that on the seventh SBA can be a great option for borrowers with "hair". Meaning of clemency signed more can be found with this program that virtually all commercial mortgages, including the 504. Credit scores can go down into the 500. Coverage ratios of debt only to be a 1.1 (compared to a 1.3) and future projections can be used if the current level of cash flow can not support the proposed debt.

So which is better? You decide .......