SBA 7(a) Boutique Hotel Loan | 65-Key Independent Hotel Acquisition and PIP

The property had been under-managed by absentee, out-of-state ownership for years. There was no brand affiliation, no online travel agency presence, no digital marketing, and no outreach to the commercial demand generators within the immediate area. The hotel relied entirely on walk-in traffic and drive-by visibility. Maintenance had been deferred. The property's revenue performance was well below what its location, at a major interstate interchange in a metropolitan market with strong airport, sports, convention, and entertainment demand, should have produced.

The acquisition financing had to support both the purchase and the renovation without overleveraging the property at its current performance level. The SBA lender needed to see a borrower with the hospitality experience to operate the hotel hands-on, a credible PIP plan that addressed the deferred maintenance and guest experience issues, and a revenue trajectory that demonstrated the property could service the debt at its current performance while growing into its post-PIP stabilized potential. The independent, non-franchised status meant there was no national reservation system or loyalty program to drive bookings. Revenue growth would depend entirely on the new ownership's ability to implement OTA distribution, direct booking strategies, and commercial outreach that the prior ownership had never attempted.

• Absentee, out-of-state ownership with no marketing, no OTA presence, and deferred maintenance
• Non-franchised independent hotel with no national reservation system or loyalty program
• Revenue well below market potential despite high-visibility location at a major interstate interchange near an international airport, sports venues, and convention facilities
• SBA lender had to underwrite the acquisition and PIP on a property whose trailing performance reflected management neglect, not market weakness
• $132,000 owner-managed PIP required for flooring, bathrooms, paint, signage, and FF&E before the property could compete for its fair share of the market

Cornovus Capital structured the $1,000,000 SBA 7(a) boutique hotel loan to cover the acquisition, the $132,000 owner-managed PIP, working capital for operations and marketing during the transition, and closing costs. The borrower's $500,000 equity injection, 34% of the total project cost, provided the lender with strong borrower commitment and positioned the LTV at 67.5% against the as-is value of $1,450,000. The 25-year fully amortizing term at WSJ Prime plus 1.75% produced a monthly debt service obligation the property could carry on its trailing revenue while the PIP and operational improvements ramped revenue toward the stabilized projection.

The credit package presented the acquiring operators' hands-on hospitality experience, the owner-managed PIP budget and timeline, and the revenue growth strategy built on implementing OTA distribution, digital marketing, and direct commercial outreach that the prior ownership had never utilized. The proforma demonstrated the path from as-is value of $1,450,000 to a stabilized value of $2,100,000 as the PIP, marketing implementation, and operational improvements took hold. The PIP at $132,000, approximately $2,000 per key, was scoped to address the most impactful guest-facing improvements at a cost level that preserved the property's independent positioning without the expense of a franchise conversion.

• $1,000,000 SBA 7(a) facility covering acquisition, $132,000 owner-managed PIP, working capital, and closing costs
• Borrower equity of $500,000 (34%) with 67.5% LTV against as-is value
• 25-year fully amortizing term at WSJ Prime + 1.75%
• PIP at approximately $2,000 per key covering flooring, bathrooms, paint, signage, and FF&E
• Revenue growth strategy built on OTA, digital marketing, and commercial outreach the prior ownership never implemented
• Proforma projecting stabilized value of $2,100,000 from as-is $1,450,000

The $1,000,000 SBA 7(a) boutique hotel loan closed with the acquisition funded, PIP capital in place, and working capital deployed. The acquiring ownership group took possession of a 65-key independent boutique hotel on a high-visibility interstate corridor in a major metropolitan market, replacing years of absentee management with an on-site, owner-operated model.

The $132,000 owner-managed PIP launched immediately post-closing, targeting completion within the first months of ownership. The new ownership implemented OTA distribution and digital marketing for the first time in the property's recent history, creating booking channels the hotel had never accessed. Utility cost reductions were realized within the first months through improved systems and operational controls. The property was positioned for significant RevPar growth with the flexibility to evaluate soft-branding or boutique repositioning options as the market position strengthened, all without the ongoing franchise fees and brand compliance costs that a national affiliation would require.

• $1,000,000 SBA 7(a) facility closed for 65-key independent boutique hotel acquisition
• $132,000 owner-managed PIP launched immediately post-closing
• OTA and digital marketing implemented for the first time under new ownership
• On-site owner-operator model replaced absentee, out-of-state management
• Property positioned for RevPar growth and future soft-branding or boutique repositioning
• Stabilized value projected at $2,100,000 against $1,450,000 acquisition price
• 25-year amortization providing long-term debt stability through the repositioning

Additional financing outcomes are available in our Transaction Highlights archive.