OAKLAND, CA—The hospitality hospitality industry in Californiais showing positive signs of economic recovery, as indicated bySBA financing secured by hotel owners, accordingto CDC Small Business Finance, the nation's leaderin SBA-504 loans used to purchase commercial realestate.

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Small Business Administration data reveals that SBA-504financing approved for California hotels in FY14 has exceeded$163 million, more than triplethe $56 million lent in FY13. The Bay Area, LosAngeles and San Diego rank in the top 10nationally for hotel room sales volume, according to a reportissued this month to the California Hotel and LodgingAssociation.

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“Hotel owners have leveraged SBA-504 loan capital to acquire andimprove properties,” said Kelly Ryan, SBA loanexpert for CDC Small Business Finance in Northern California. "SBAfinancing enables hoteliers to obtain multiple SBA loans formultiple hotels with no project size limit."

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Ryan said hotel owners are able to seize SBA financingopportunities in part because of the “Green 504” loan program,which allows higher lending amounts for small business owners whowant to buy or upgrade commercial/industrial buildings and makethem more energy efficient. Buildings over $20 million can befinanced using this unique program offered jointly by a bank andCDC Small Business Finance. Small business owners need onlydemonstrate a projected 10% reduction in energy costs by deployingone or more energy-saving improvements (e.g. insulation, lighting,heating/air conditioning).

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One business taking advantage of the program was LaQuinta Inn, a 145-unit hotel located in Silicon Valley.The property was purchased last year with a $4 millionSBA-504 loan which included financing for majorrenovations.

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“The demand for high-tech capabilities in hotels is rising andour renovations would have been very difficult without SBA 504financing,” said La Quinta owner RupeshPatel, who has built, owned and operated hotels for over35 years. “La Quinta provides a top-quality experience and willcontinue to compete with higher-scale motels, thanks to the SBA-504loan. It makes buying a commercial building achievable.”

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SBA-504 loans offer 85% fixed-rate financingfor hotel acquisition and construction. The current interest ratefor a 20-year SBA-504 loan is 5.06%. Notable hotelbrands using SBA-504 financing in California includeHoliday Inn, Comfort Suites, Travelodge, HamptonInn and Quality Inn.

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David Phillips

David Phillips is a Chicago-based freelance writer and consultant with more than 20 years experience in business and community news. He also has extensive reporting experience in the food manufacturing industry for national trade publications.