USA, Sacramento , California. June 06, 2025

"The SBA 504 loan program is outstanding for hotel properties," says James Woo, co-owner of WS Management, who along with his brother Sean has used the program to grow a successful hotel portfolio. "The key is to work with an SBA lender that understands the hotel field."

The SBA 504 loan program is specifically designed to support small business owners in purchasing fixed assets-such as real estate, buildings, or major equipment-with long-term, fixed-rate, and below-market financing. It's particularly well-suited for capital-intensive industries like hospitality, where property acquisition, renovations, and buildouts can require significant upfront investment.

Some of the top benefits of SBA 504 loans include:

• Low down payments, as little as 15% for hospitality projects, allowing businesses to retain more capital for operations or future investments.
• Fixed interest rates for the life of the loan, providing long-term stability and predictable cash flow.
• Financing for construction and renovations, enabling entrepreneurs to build or improve hospitality properties to brand standards or operational needs.
• Preservation of working capital, since borrowers don't have to tie up as much cash in real estate purchases.

Whether it's buying a hotel, expanding a facility, or constructing a new site from the ground up, the SBA 504 program offers flexibility and financial leverage that traditional loans often cannot match.

The Role of Certified Development Companies (CDCs)

To access the SBA 504 loan, small businesses must work with a Certified Development Company, or CDC-nonprofit entities approved by the SBA to package, process, and service the 504 loan. These CDCs work in tandem with a conventional lender, typically funding 35% of the total project while the lender covers 50% and the borrower provides the remaining 15%.

However, not all CDCs have the same level of industry insight or experience with complex transactions.

James Woo shares his early experience: "We started working with a different CDC but quickly realized that not all have the experience needed for hotel deals. Timelines and deadlines are critical in these transactions. An experienced CDC can be the difference between closing successfully or missing the opportunity altogether."

Experience Matters When Deals Get Complicated

In hotel and hospitality deals, multiple layers of complexity-from franchisor requirements and operational approvals to construction planning-can impact a project's timeline. For James and Sean Woo, working with a CDC that thoroughly understood these moving parts was essential.

During one transaction, a lack of follow-through from a previous CDC nearly caused the deal to collapse. By switching to a more experienced partner, they were able to navigate SBA requirements and meet the closing deadline-salvaging the acquisition of a Residence Inn by Marriott in Rancho Cordova, CA.

504 Loans and Economic Impact

Through strategic use of SBA 504 loans, WS Management has grown their hotel portfolio to eleven properties, with more in the pipeline. These acquisitions don't just add to their balance sheet-they create local jobs, expand community infrastructure, and contribute to broader economic development.

One recent deal alone ensured continued employment for 25 hotel staff members-a clear reflection of the SBA 504 program's mission to support job creation and small business growth.

As Woo reflects, "Every deal is different. Even if you've been through the 504 process multiple times, each project brings its own challenges. Having a knowledgeable CDC on your team ensures you can navigate those hurdles and meet deadlines, which ultimately lets you focus on growth."

Summary: The SBA 504 Advantage

For entrepreneurs in hospitality and beyond, the SBA 504 loan provides a cost-effective, strategic path to ownership and expansion. But because it's a specialized program, it's important to partner with a CDC that understands the process, communicates effectively with lenders, and brings deep experience to your specific industry.

Whether you're acquiring your first property or adding to a growing portfolio, the SBA 504 loan program can help unlock opportunities-and an experienced CDC can ensure you reach the finish line.