TMC Financing Secures Financing to Boutique San Francisco Hotel after other Banks Said No

SBA 504 Program Helps The Hotel Castro Beat the Odds to Open in The Castro

Hotel financing can be challenging, but when new construction and a pandemic are involved, it can be nearly impossible. After the owners received countless rejections from conventional lenders, TMC Financing provided the financing that The Hotel Castro required. By utilizing the SBA 504 Program, they were able to obtain 80% financing to build a ground-up hotel at 4230 18th Street, San Francisco at a total project cost of $7.5 million.

Before connecting with TMC Financing, The Hotel Castro’s General Partner Gannon Tidwell spoke to one bank after another in his quest to secure a conventional commercial loan. The timing was against him: Banks were averse to risk as the early months of the pandemic unsettled markets and created an uncertain future.

“Conventional lenders prefer flag hotels from big brands, and permitting is difficult,” explains Anna Rummelein who administered the SBA 504 loan on TMC Financing’s behalf. “Without SBA financing, independent hospitality properties struggle to get financing even at the best of times.

“The SBA 504 loan was the optimal solution for a hotel that didn’t have an operating history,” states Tidwell. “Everything we had to do was from forecasts. Also, because it’s a government-backed program, we knew this route would provide more liberal underwriting.”

Overseen by the Small Business Administration and administered by Certified Development Companies like TMC Financing, the SBA 504 Loan Program empowers business owners to purchase fixed assets such as owner-occupied commercial real estate and equipment. The program boasts low down payments and below-market, long-term, fixed interest rates.

“I’ve been financing real estate for more than 20 years and this is probably the hardest financing request that I’ve ever worked on,” Tidwell says. “Anna and I worked together to figure out how to do it.”

A construction project that was initially planned to take 18 months was ultimately completed in 30. During that time, Tidwell saw other hospitality properties close down and new construction called off or abandoned. But his partnership with TMC Financing saw him through to the end and a successful launch.


“Hotel Castro can now take advantage of San Francisco’s economic rebound,” states Rummelein.

“TMC definitely knows their business,” explains Tidwell. We were able to collaborate and work through the hiccups along the way. The most important thing to me is results – and we got results.”

The total project cost for Hotel Castro was $7.5 million, with $1.5 million going to the cost of land and $6 million to construction. The SBA 504 loan was structured as a 25-year term loan with a 20 percent down payment. The property opened its doors to the public in early 2022.

The future looks bright for The Hotel Castro in its beloved Castro neighborhood. As a new anchor business, it is delivering economic opportunities and introducing hundreds of guests to San Francisco every month.

“I am pleased to report that the hotel is in its eleventh month of operation, we’re profitable, and we’ve been getting really good reviews. We keep growing our client base and we’re excited for San Francisco’s tourism industry to continue to recover,” concludes Tidwell. “We are optimistic that every year is going to get better.”

Learn more about The Hotel Castro on their website, or contact us at TMC Financing to get started with your own SBA 504 loan.