SBA Hotel Refinance | Best Western Premier Conversion

The property had been acquired as a distressed hospitality asset with a significant portion of its rooms non-operational. The ownership group began a phased renovation, but COVID-19 forced operations to halt before the work was complete. To continue financing the renovation through the disruption, the borrower accumulated a series of private-party notes from individual creditors over multiple years. By the time stabilization was within reach, ten separate obligations were outstanding, each at different terms and each requiring coordinated payoff at closing.

The capital stack this created was expensive, fragmented, and structurally incompatible with a long-term stabilization plan. Short-term private notes carry no amortization benefit and typically demand principal repayment on compressed timelines. The borrower's monthly obligations were higher than what the property's current operating income could comfortably support, and the structure offered no room for the working capital the brand conversion required.

The external environment added complexity. Hospitality underwriting coming out of COVID required lenders to evaluate assets that had operated under severely constrained conditions for multiple years. Partial occupancy, suppressed revenue history, and interrupted renovation timelines were common across the sector. Lenders reviewing this file needed to underwrite the property's trajectory toward stabilization, not its COVID-era operating record, and present a clear narrative for doing so within SBA credit standards.

Separately, the Best Western Premier brand conversion carried its own requirements. The Property Improvement Plan needed to be completed and financed in a way that aligned with the SBA facility's timeline and draw structure. Getting all of these elements to close simultaneously required precise coordination.

• Ten separate private-party obligations with individual creditors, all requiring coordinated payoff at a single closing
• Property had operated with severely constrained room availability during the COVID period, suppressing the revenue history available for underwriting
• Short-term private-party capital stack was expensive and structurally incompatible with long-term stabilization
• Best Western Premier PIP requirements needed to be aligned with the financing structure and renovation timeline
• Post-COVID hospitality lending environment required a credit narrative built on trajectory and stabilized performance, not the disrupted operating record

Cornovus Capital built the credit package around the property's performance trajectory and the operator's demonstrated ability to manage the asset through one of the most disruptive periods in hospitality history. The underwriting narrative established what the property was becoming, not what it had been during the COVID disruption. Strong average daily rate performance, growing occupancy as rooms came back online, and a market that supported continued demand provided the foundation for a stabilized performance projection that met SBA credit standards.

The SBA hotel refinance was structured to accomplish three objectives simultaneously. First, all ten private-party obligations were retired at closing, eliminating the fragmented capital stack and all associated near-term repayment pressure. Second, the facility was sized at $200,000 above the outstanding debt, providing capital for remaining renovation costs, working capital, and the expenses associated with the brand conversion. Third, a 12-month interest-only period was structured into the facility, aligned with the renovation completion timeline and protecting operating cash flow during the period before all 47 rooms were generating full revenue.

The 25-year fully amortizing structure at Prime plus 2% replaced every short-term private obligation with a single monthly payment sized to what the stabilized property could comfortably support. The brand conversion to Best Western Premier was aligned with the closing timeline, providing the operator immediate access to a national reservation system, loyalty program, and the revenue performance improvements that come with a recognized flag in a competitive hospitality market.

• Built the underwriting narrative around the operator's performance trajectory and market position, not the COVID-era operating history
• Structured payoff coordination for all ten private-party obligations, retired simultaneously at a single closing
• Sized the facility to provide $200,000 in additional proceeds above existing debt for renovation completion and working capital
• Negotiated a 12-month interest-only period to protect operating cash flow during the final renovation and ramp phase
• Structured a 25-year fully amortizing term at Prime plus 2%, replacing short-term high-cost debt with a long-term institutional facility
• Aligned the SBA closing timeline with PIP completion and Best Western Premier brand conversion requirements

The $1,740,000 SBA 7(a) hotel refinance closed with all ten private-party obligations retired, $200,000 in additional proceeds secured, and a single 25-year institutional facility replacing the entire prior capital stack. The 12-month interest-only period protected operating cash flow through the renovation completion phase. At projected year-end stabilization, the property carried a debt service coverage ratio of 2.16x against an estimated value of $4.5 million, producing a loan-to-value of 38.7%.

The Best Western Premier conversion positioned the property within a national reservation and loyalty network, providing immediate access to the distribution channels and brand recognition that drive rate and occupancy performance in competitive secondary hospitality markets. All 47 rooms came online, and gross revenue was projected to more than double year-over-year as stabilized operations took hold. The borrower moved from ten separate creditors and compressed repayment timelines to a single predictable monthly payment on a long-term amortizing structure.

• Ten private-party obligations retired simultaneously at a single closing
• $200,000 in additional proceeds secured above existing debt for renovation completion and working capital
• 12-month interest-only period protecting cash flow through the renovation and ramp phase
• 25-year fully amortizing term at Prime plus 2%, replacing all short-term private obligations
• DSCR of 2.16x projected at year-end stabilization
• LTV of 38.7% against a $4.5 million estimated property value
• Best Western Premier conversion completed, all 47 rooms fully operational
• Gross revenue projected to more than double year-over-year as stabilized operations commenced

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