SBA Financing… A New “Green” Twist

SBA Financing… A New “Green” Twist

Until recently, the thought of SBA financing for hotels would elicit negative reactions from hotel investors. Mountains of paperwork, expensive filing fees, governmental scrutiny, and insufficient lending limits caused most developers to turn their backs on “504’s” and “7(a)’s.” But in this “recovery,” the game has changed… and significantly so.

As part of the Recovery Act of 2009, the Federal Government set aside funds to make SBA loans more palatable for small businesses. Simply put, the SBA waived filing fees and approximately doubled the amount it would underwrite for buildings which met certain criteria for energy savings (specifically, reductions in carbon footprint).

Although the waiving of filing fees has since been expired (and may return again), the bulk of these program enhancements remain intact.

HiFive commissioned a nationally recognized engineering firm to study only those energy saving exercises that made economic sense and with finite payback periods.

Without listing all of the specifics of achieving energy savings in hotel buildings (find out more in our “Making Green With Green” article), HiFive has found reaching the initial threshold is a relatively easy thing to do. For example, in a recently completed project, the construction budget only increased by 3%. To the delight of the hotel, the energy savings have led to a “real world” reduction of approximately 30% in their energy bills.

Finally, from a bank’s perspective, it cannot be understated that the prospect of loan approval increases greatly when 40% of the debt is guaranteed by the government.

Contact HiFive Development Services today to see how we can make SBA financing work for your next building project.