# Hotel financing questions, answered - URL: https://matthewshotelmarkets.com/hotel-financing/faq - Last updated: 2026-10-01 - Author: Luke Thompson, VP & Director, Capital Markets, Matthews Hotel Markets (https://matthewshotelmarkets.com/team/luke-thompson) - Reviewed by: Miles Cortez III, VP & Director, Hospitality Capital Markets (https://matthewshotelmarkets.com/team/miles-cortez) - Format: Markdown copy of the HTML page at the URL above. Same content, same data source. --- This page collects the short questions that do not need their own page. SBA's 7(a) program lists no minimum loan size and caps loans at $5 million.[1] Origination is typically quoted in points on the loan amount. A franchise comfort letter is a closing condition on most branded hotel loans. The 10-year Treasury was 5.29 percent on September 30, 2026.[2] ## Key takeaways - Every answer here is 100 words or fewer, and links to the page that goes deeper. - Minimum loan size is the filter most owners do not know exists. - Points are negotiable; the index and the spread usually are not. - Comfort letters run on the franchisor's timeline, so request them early. - Leverage in 2026 is lower than 2021 at the same NOI, because the rate is higher. ## From our rate sheet Matthews Hotel Markets' October 2026 rate sheet marks points and working leverage as not yet published for every lender type except SBA, where SBA rules cap a hotel 504 structure at 85% of project cost. What it does publish: the 10-year Treasury at 5.29% on September 30, 2026 and the 7(a) maximum allowable rate at 10.00%, with Prime at 7.00% since September 17, 2026.[4][5] [Matthews Hotel Markets rate sheet](https://matthewshotelmarkets.com/rates) ## How small a hotel loan can I get? SBA's 7(a) program lists no minimum loan size, so SBA lenders go smallest; CMBS and life insurance companies generally prefer larger loans.[1] Banks and credit unions size flexibly around a relationship, sometimes below the SBA floor for the right sponsor. Full comparison of minimums by lender type is on [/hotel-financing/hotel-lenders-by-type](https://matthewshotelmarkets.com/hotel-financing/hotel-lenders-by-type). ## What fees and points should I expect? Origination is typically quoted in points on the loan amount, and it is one of the more negotiable line items in a hotel loan. Third-party costs, appraisal, property condition assessment, and environmental report, are not generally negotiable. The index and spread that set the rate itself are largely a market quote, not a negotiating line item the way points can be. See [/hotel-financing/hotel-loan-rates](https://matthewshotelmarkets.com/hotel-financing/hotel-loan-rates) for the full pricing structure. ## What is a franchise comfort letter? A comfort letter is the franchisor's agreement to let a lender step into the franchise agreement if it forecloses, protecting the flag through a change of ownership. It is a standard closing condition on almost every branded hotel loan, and the franchisor sets the timeline, so request it early rather than late in the process. More detail is on [/hotel-financing/loan-requirements](https://matthewshotelmarkets.com/hotel-financing/loan-requirements). ## Can I qualify with weak occupancy? Yes, if the lender believes the shortfall is temporary and can see a credible trend back toward the comp set, rather than a structural decline. A lender reviewing a soft trailing number weighs the cause and the trend as much as the number itself. Full discussion of how lenders treat weak occupancy is on [/hotel-financing/loan-requirements](https://matthewshotelmarkets.com/hotel-financing/loan-requirements). ## Will I have to sign personally? Most bank and SBA hotel loans carry a personal guarantee, and SBA rules generally require one from anyone owning 20 percent or more; non-recourse structures are available through CMBS and life companies, generally at larger loan sizes.[3] The recourse question is often the fastest way to narrow the realistic lender list for a given deal; see [/hotel-financing/hotel-lenders-by-type](https://matthewshotelmarkets.com/hotel-financing/hotel-lenders-by-type) for which types offer non-recourse. ## What amortization is standard? SBA 7(a) allows up to 25 years on real estate; conventional lenders set their own schedules, and CMBS loans often include an interest-only period.[1] Amortization schedule directly affects the annual payment on a given loan amount and rate, which in turn affects the DSCR test. The full comparison by lender type is on [/hotel-financing/hotel-loan-rates](https://matthewshotelmarkets.com/hotel-financing/hotel-loan-rates). ## Why is my leverage lower than it was in 2021? At the same NOI, a higher rate produces a higher annual payment per dollar borrowed, which means the same debt service coverage test supports a smaller loan today than it did in 2021. This is arithmetic, not a change in lender appetite for hospitality. The worked example below shows the exact mechanism with real numbers, and the full refinance implications are on [/hotel-financing/refinance](https://matthewshotelmarkets.com/hotel-financing/refinance). ## Quick reference: hotel loan basics, September 2026 | Question | Short answer | Deeper page | | --- | --- | --- | | Minimum loan size | SBA 7(a): no listed minimum, $5M maximum[1]; CMBS and life co prefer larger loans | /hotel-financing/hotel-lenders-by-type | | Origination | Quoted in points on loan amount; negotiable | /hotel-financing/how-debt-placement-works | | Comfort letter | Required on most branded hotel loans; request early | /hotel-financing/loan-requirements | | Amortization | Up to 25 years on SBA 7(a) real estate[1]; others vary by lender | /hotel-financing/hotel-loan-rates | | Personal guarantee | Standard on bank and SBA; not on CMBS or life co | /hotel-financing/hotel-lenders-by-type | | Leverage vs. 2021 | Lower at the same NOI, because the payment is higher | /hotel-financing/refinance | ## Worked example **Hypothetical: why the same hotel borrows less in 2026 than in 2021** Hypothetical. The same hotel, the same $1.60M of NOI, the same 1.35x test and 25-year schedule. Only the rate changes. At 4.00 percent in 2021, the annual constant per $1M is about $63,400. Maximum debt service of $1,185,185 supports a loan of $18.69M. At 7.25 percent in 2026, the annual constant per $1M rises to about $86,800. The same maximum debt service supports a loan of $13.65M. The hotel did not change. The loan fell $5.04M, 27 percent. This single comparison explains most of what owners are experiencing at maturity right now. ## Frequently asked ### What is the smallest hotel loan a lender will make? SBA's 7(a) program lists no minimum loan size, so SBA lenders go smallest. CMBS and life insurance companies generally prefer larger loans. Banks size flexibly around a relationship. ### How many points will I pay on a hotel loan? It varies by lender and deal, and points are one of the more negotiable line items in a hotel loan. Lenders do not publish them, and our rate sheet marks them not yet published. Get the figure in writing. ### What is a franchise comfort letter? The franchisor's agreement to let a lender step into the franchise agreement if it forecloses, protecting the flag through a change of ownership. It is a standard closing condition, so request it early. ### Can I finance a hotel running 50 percent occupancy? Possibly, if the lender believes the shortfall is temporary and identifiable, such as a renovation or new supply still being absorbed, rather than a structural decline against the comp set. ### Is a personal guarantee always required? No. It is standard on most bank and SBA loans. Non-recourse structures are available through CMBS and life insurance companies, generally at larger loan sizes. ### What is standard amortization on a hotel loan? SBA 7(a) allows up to 25 years on real estate. Conventional lenders set their own schedules, and CMBS loans often include an interest-only period for part of the term. ### Why can I borrow less than I could in 2021? At the same NOI, a higher rate produces a higher annual payment per dollar borrowed, so the same coverage test supports a smaller loan. It is a function of rate, not a change in lender appetite. ### Do hotel lenders require an FF&E reserve? Usually, commonly funded at closing and replenished annually as a percentage of revenue. It funds ongoing furniture, fixtures and equipment replacement and is a standard loan covenant. ## Who wrote this [Luke Thompson](https://matthewshotelmarkets.com/team/luke-thompson) VP & Director, Capital Markets, Matthews Hotel Markets (512) 771-1860 · luke.thompson@matthews.com · [LinkedIn](https://www.linkedin.com/in/hotelfinance101/) Reviewed by [Miles Cortez III](https://matthewshotelmarkets.com/team/miles-cortez), VP & Director, Hospitality Capital Markets. ## Sources 1. [7(a) loan program: terms, conditions, and eligibility](https://www.sba.gov/sba-lenders/#7a-terms) · U.S. Small Business Administration · accessed September 18, 2026 2. [Daily Treasury Par Yield Curve Rates](https://home.treasury.gov/resource-center/data-chart-center/interest-rates/TextView?type=daily_treasury_yield_curve) · U.S. Department of the Treasury · accessed September 18, 2026 3. [13 CFR 120.160, Loan conditions (guarantees)](https://www.law.cornell.edu/cfr/text/13/120.160) · Code of Federal Regulations, via Legal Information Institute · accessed September 18, 2026 4. [Matthews Hotel Markets October 2026 rate sheet](https://matthewshotelmarkets.com/rates) · Matthews Hotel Markets · accessed September 18, 2026 5. [BNY Increases Prime Lending Rate to 7.00%](https://www.prnewswire.com/news-releases/bny-increases-prime-lending-rate-to-7-00-302881066.html) · The Bank of New York Mellon Corporation, via PR Newswire · accessed September 18, 2026 ## Related ### Guide - [How does hotel financing work, and what does it cost right now?](https://matthewshotelmarkets.com/hotel-financing) ### Other questions in this guide - [What do lenders require for a hotel loan?](https://matthewshotelmarkets.com/hotel-financing/loan-requirements) - [Who are the biggest hotel lenders, and which type fits my deal?](https://matthewshotelmarkets.com/hotel-financing/hotel-lenders-by-type) - [What are current hotel loan interest rates?](https://matthewshotelmarkets.com/hotel-financing/hotel-loan-rates) - [How do I refinance a hotel loan before it matures?](https://matthewshotelmarkets.com/hotel-financing/refinance) ### Terms defined in the [glossary](https://matthewshotelmarkets.com/glossary) - [Debt Service Coverage Ratio (DSCR)](https://matthewshotelmarkets.com/glossary/dscr) - [Debt Yield](https://matthewshotelmarkets.com/glossary/debt-yield) - [Net Operating Income (NOI)](https://matthewshotelmarkets.com/glossary/noi) ### Our own data - [Matthews Hotel Markets rate sheet](https://matthewshotelmarkets.com/rates) If a question is not answered here, the Matthews Hotel Markets capital markets desk will answer it directly. [Ask a question we have not answered here](https://matthewshotelmarkets.com/contact) --- Cite as: Luke Thompson, Matthews Hotel Markets. "Hotel financing questions, answered." https://matthewshotelmarkets.com/hotel-financing/faq. Last updated 2026-10-01.