CREATING A NEW BOUTIQUE HOTEL PROPERTY is always a challenge, even more so when it involves new construction in San Francisco. So, it was no surprise when the team behind The Hotel Castro found it impossible to get conventional bank financing for the $7.5 million project in one of the city’s iconic neighborhoods.
It didn’t help that the hotel’s General Partner, Gannon Tidwell, made his pitch during the early months of the COVID pandemic. With the market shaky and the prospects for tourism uncertain, banks were averse to taking the risk to fund Tidwell’s project.
Yet, the unique hotel tucked onto a residential street a block from the center of the Castro neighborhood is welcoming guests today, thanks to more unconventional financing. The partnership obtained their need with money from the Small Business Administration’s SBA 504 program, which offers in the SBA’s words, “long term, fixed rate financing for major fixed assets that promote business growth and job creation.”
The Hotel Castro’s loan was facilitated by TMC Financing, an Oakland-based lender that is one of the Certified Development Companies that have access to SBA 504 funding. TMC noted that this financing option is ideal for smaller properties as well as new establishments without the operating history that conventional lenders might want to see.