SBA 7(a) in Hospitality

[Reid Smith]

Hey there, 

Under contract on a 16 room Motel and Restaurant.  Seller does not want to hold paper.  To my surprise, local banks are a bit disinterested in the Hospitality sector right now.  Pro Forma looks great, strong Financials for us as buyers and the property already has a commercial appraisal for over our purchase price.  We are funding a $300k rehab of the motel and will operate as STF and lease the stand alone restaurant.  Once stabilized(projected 3 years) we hoped to refi to get some of our $ back out. 
We have been offered an SBA 7(a) loan, and would love some feedback/pitfalls on SBA.  No experience with one. 

A local bank has offered us an SBA 7(a) loan at 75% LTV 8.25% 20year.

Another bank offered 60% at 7.75%, so we would be going back to seller to ask for 20% seller financing. 

Thanks so much for any insight!  

Reid