SBA Hotel Refinance | $4.2M Franchise Hotel Debt Consolidation and PIP

The hotel was carrying two separate facilities from a hospitality-focused non-bank lender: a mortgage facility and a CapEx facility, both with compressed maturities that created near-term refinance pressure. The non-bank debt structure carried higher interest costs than an institutional facility, consuming cash flow the ownership needed for property improvements and operational reinvestment. The franchise brand had issued a property improvement plan requiring renovations to guest rooms, public spaces, and property infrastructure. The PIP timeline and the debt maturity timeline were converging, creating a situation where the ownership needed to simultaneously refinance the existing debt and fund the renovation program without depleting operating reserves.

The ownership group also operated a full-service sister property in the same market that had experienced an FF&E procurement disruption during its own PIP: incorrect furnishings were delivered, the international shipping vendor went out of business, and more than half of the sister property's rooms were taken offline for nearly a year while the issue was resolved. Both properties continued to service their debt obligations through the disruption, and the sister property's existing lender subsequently refinanced its own paper on that asset, confirming the credit remained sound. But the trailing revenue trends across the portfolio reflected the operational impact of rooms being offline, and the SBA lender's underwriting had to account for those trends. The underwriting challenge was real: Cornovus Capital had to model the subject property's post-PIP performance trajectory using the hotel's own historical, current, and projected operating data to demonstrate that the revenue recovery the PIP would produce supported the SBA facility's debt service.

• Two non-bank facilities with compressed maturities creating near-term refinance pressure
• Brand-mandated PIP requiring guest room, public space, and infrastructure renovations on a defined timeline
• Higher carrying cost on existing non-bank debt restricting cash flow available for property reinvestment
• Sister property's FF&E procurement disruption had taken 50%+ of rooms offline for nearly a year; both hotels continued servicing debt, but trailing portfolio trends reflected the operational impact
• Post-PIP performance modeling required using the property's own historical, current, and projected data to demonstrate the revenue recovery trajectory

Cornovus Capital structured the $4,200,000 SBA hotel refinance to retire both existing non-bank facilities at closing, fund the brand-mandated PIP within the SBA facility, and provide working capital to sustain operations through the renovation. The 25-year fully amortizing term at WSJ Prime plus 2.00% replaced the compressed maturities and higher carrying costs of the prior debt structure with a single long-term institutional facility that immediately reduced monthly debt service and freed cash flow for property reinvestment.

The credit package was built on the property's own operating data modeled forward. Cornovus Capital developed the post-PIP performance proforma using the hotel's historical revenue, occupancy trends, ADR trajectory, and RevPar performance alongside the projected recovery that a completed property improvement plan produces. Industry data demonstrates a 10% to 22% lift in occupancy, ADR, and RevPar following a PIP completion, and the subject property's own numbers, modeled against that trajectory using real historical and current data, supported the facility's debt service at the projected post-renovation stabilization. The ownership group's multi-property track record and the fact that both hotels continued to service their debt through the operational disruption confirmed the credit fundamentals. Cornovus Capital coordinated the payoff of both existing non-bank facilities, the SBA authorization, and the PIP funding allocation to bring the refinance to a single closing that gave the ownership group immediate access to renovation capital and a stabilized debt structure.

• Consolidated two non-bank facilities (mortgage and CapEx) into a single $4.2M SBA 7(a) facility
• 25-year fully amortizing term at WSJ Prime + 2.00% replacing compressed maturities and higher carrying costs
• Brand-mandated PIP funded within the SBA facility for guest room, public space, and infrastructure renovations
• Working capital included to sustain operations, staffing, and marketing through the renovation period
• Post-PIP proforma built on the property's own historical, current, and projected data, modeling the 10% to 22% occupancy, ADR, and RevPar recovery that follows PIP completion
• Coordinated payoff of both existing facilities and SBA authorization to a single closing

The $4,200,000 SBA hotel refinance closed with both prior non-bank facilities retired at closing, the PIP renovation fully funded within the SBA structure, and working capital deployed to the ownership group. The 25-year amortization replaced compressed, high-cost non-bank debt with a stable institutional facility, immediately improving the property's debt service coverage and freeing operating cash flow for the renovation and operational improvements the franchise brand required.

The refinance positioned the 110-key select-service hotel for post-PIP stabilization with a debt structure designed for long-term performance rather than near-term refinance pressure. The ownership group emerged with a single monthly obligation, a fully funded renovation program, and the liquidity to execute the PIP on the franchise brand's timeline without disrupting hotel operations or guest experience during the construction period.

• $4,200,000 SBA 7(a) facility closed, retiring both non-bank mortgage and CapEx facilities at closing
• 25-year fully amortizing term at WSJ Prime + 2.00% replacing compressed, higher-cost non-bank debt
• Brand-mandated PIP fully funded within the SBA facility
• Working capital preserved for operations, staffing, marketing, and guest experience through the renovation
• 110-key select-service hotel repositioned for post-PIP revenue growth and long-term franchise compliance

Additional financing outcomes are available in our Transaction Highlights archive.