MainStay Suites Franchise Loan: The Complete Financing Guide for MainStay Suites Franchise Owners

Breaking into the extended-stay hotel market is one of the most lucrative moves a hospitality investor can make - and MainStay Suites, Choice Hotels' flagship extended-stay brand, sits at the center of that opportunity. Whether you are acquiring an existing property, building a new location, or refinancing current obligations, securing the right MainStay Suites franchise loan is the critical step between opportunity and ownership. This guide walks you through every financing option, cost detail, and lender requirement you need to know.

What Is MainStay Suites?

MainStay Suites is an extended-stay hotel brand owned and franchised by Choice Hotels International, one of the world's largest hotel franchise companies with more than 7,500 properties across 46 countries. Launched in the 1990s, MainStay Suites carved out a distinct niche by catering to guests who need accommodations for a week, a month, or longer - corporate relocations, project-based workers, traveling nurses, military personnel, and families in transition are all core segments.

The brand is positioned as an upper-moderate extended-stay option, placing it above economy brands like WoodSpring Suites but below upscale brands like Residence Inn by Marriott or Homewood Suites by Hilton. That middle-market positioning gives owners significant pricing flexibility and broad market access across secondary cities, suburban corridors, and drive-to travel markets.

As of 2025, MainStay Suites operates more than 100 locations across the United States, with strong occupancy performance driven by the structural demand for extended-stay lodging. According to data from STR (a CoStar Group division), extended-stay hotels have consistently outperformed traditional hotels on occupancy rates, averaging occupancy above 75% even during market downturns.

MainStay Suites Franchise Costs Overview

Before you approach a lender, you need a precise picture of what a MainStay Suites franchise actually costs. The total investment varies significantly based on whether you are converting an existing property, building ground-up, or acquiring an existing franchise. Below is a breakdown based on the Choice Hotels Franchise Disclosure Document (FDD) and industry data.

Breakdown of MainStay Suites Startup Costs

Ongoing fees include a royalty of approximately 5% of gross room revenue, a marketing/reservation fee around 1.5-2.5%, and a frequent traveler program contribution. These ongoing costs must be factored into your cash flow projections when applying for a loan.

Property Conversion Costs

Converting an existing hotel or apartment complex into a MainStay Suites typically reduces the total investment significantly. Conversion projects can range from $1.5 million to $5 million depending on the condition of the existing property and the scope of renovations required to meet brand standards. Property improvement plans (PIPs) are required for conversions and must be reviewed with a Choice Hotels development representative before closing on financing.

Benefits of Owning a MainStay Suites Franchise

Investors who choose MainStay Suites gain access to a proven extended-stay model with structural demand drivers that transcend typical travel cycles. Here is why the brand continues to attract serious hospitality investors:

Extended-Stay Demand Is Structural, Not Cyclical

Extended-stay demand is driven by corporate relocation, project labor, healthcare travel, and family transitions - not leisure tourism cycles. According to research published by Forbes, extended-stay hotels have demonstrated significantly stronger performance during economic downturns compared to traditional hotel segments. This defensive characteristic makes MainStay Suites an attractive asset class for lenders and investors alike.

Lower Operating Costs Per Room

Because extended-stay guests cook in their suites, use fewer amenity services, and require less daily housekeeping, operating costs per available room (PAR) are substantially lower than comparable traditional hotels. This translates into wider operating margins and a faster path to debt service coverage.

Strong Loyalty Program Integration

MainStay Suites participates in Choice Privileges, one of the largest hotel loyalty programs in the world with more than 50 million members. Access to this loyalty base gives franchisees a built-in demand channel that reduces reliance on OTA platforms and associated commission expenses.

Choice Hotels Corporate Support

Franchisees benefit from Choice Hotels' revenue management tools, central reservation system, national marketing campaigns, and approved vendor relationships. The franchisor also maintains a preferred lender program that can help connect franchise applicants with hotel-experienced financing sources.

How to Finance a MainStay Suites Franchise

Financing a MainStay Suites location requires a layered capital strategy. Very few investors fund a hotel acquisition or new build with a single loan product. Instead, most successful hotel investors combine two or three funding sources to cover the full capital stack: senior debt, mezzanine or subordinated debt, and equity.

The Capital Stack for MainStay Suites

Senior Debt (60-75% of total costs): The largest portion of your financing will come from a senior commercial real estate or SBA loan. This is the primary lien on the property and carries the lowest interest rate because it holds the most secure position in the capital stack.

Mezzanine or Subordinated Debt (5-15%): For developers who want to minimize equity contribution, mezzanine financing fills the gap between senior debt and equity. It carries a higher interest rate and subordinate position but allows you to close without committing maximum cash upfront.

Equity (20-30%): Your personal equity injection - cash, land contribution, or equity from another asset - is required by virtually all hotel lenders. SBA lenders typically require a minimum of 10-20% equity for hotel loans, while conventional lenders may require 25-35%.

Timing Your Application

Applying for a MainStay Suites franchise loan is most efficient when you follow this sequence: first, receive a letter of intent from Choice Hotels confirming your franchise application is in process; second, secure a site or letter of intent on a property; third, engage your lender with a complete financing package. Having the franchise agreement and site control in place before approaching a lender saves weeks in the underwriting process and signals credibility.

If you are converting an existing property, engage a lender as soon as the PIP is completed and cost-estimated. Lenders who specialize in hotel franchise loans - like the team at Crestmont Capital - understand the conversion timeline and can structure draws around construction milestones.

Loan Types for MainStay Suites Franchise Owners

There are six primary loan products that MainStay Suites franchise investors should know about. Each has distinct advantages, qualifying criteria, and best-use cases.

1. SBA 7(a) Loans

The SBA 7(a) program is the most widely used government-backed loan for hotel franchise acquisitions and new builds. Key terms include:

• Loan amounts up to $5 million per project
• Terms up to 25 years for real estate, 10 years for working capital
• Down payment as low as 10% for qualified borrowers
• Rates tied to Prime or SOFR, typically 2-3% above the benchmark
• SBA guaranty of up to 85% reduces lender risk and improves approval odds

The SBA 7(a) is ideal for first-time hotel investors or those with a strong business plan but limited collateral. Visit our SBA Loans page to learn more about eligibility and the application process.

2. SBA 504 Loans

The SBA 504 program pairs a conventional first mortgage (50%) with an SBA-backed debenture (40%), requiring only 10% from the borrower. It is designed specifically for fixed assets including real estate and major equipment. The 504 is particularly attractive for ground-up MainStay Suites construction because the long-term fixed-rate debenture provides predictable debt service for a decade or more.

3. Conventional Commercial Real Estate Loans

Conventional hotel loans from banks and credit unions typically offer higher loan limits than SBA products - often $5 million to $20 million for a single hotel property. They require stronger financial profiles, typically a minimum DSCR (Debt Service Coverage Ratio) of 1.25x, LTV below 70%, and borrower net worth at least equal to the loan amount.

4. CMBS Loans (Commercial Mortgage-Backed Securities)

For larger MainStay Suites projects ($5M+), CMBS financing offers competitive rates and non-recourse structure, meaning the lender can only claim the hotel property itself - not your personal assets - in the event of default. CMBS loans are securitized and sold to investors, which limits their flexibility but can provide excellent terms for stabilized properties with strong occupancy history.

5. Bridge Loans

Bridge financing is short-term (typically 12-24 months) and used when a permanent loan cannot be secured immediately - for example, while a conversion property is being renovated and ramping up occupancy. Term loan products and bridge financing from alternative lenders can fill this gap while you stabilize the property and qualify for permanent financing.

6. Business Lines of Credit

A business line of credit is not a primary financing vehicle for real estate acquisition, but it is an essential tool for managing the cash flow demands of hotel operations - covering payroll during low-occupancy periods, purchasing supplies in bulk, or funding small capital improvements without disrupting your primary debt obligations.

7. Equipment Financing

Hotel FF&E - including commercial kitchen appliances, laundry equipment, housekeeping carts, and technology systems - can be financed separately through equipment financing programs. This preserves your working capital and keeps the equipment off your real estate loan, which can improve LTV ratios on the primary financing.

Lender Requirements and Qualifications

Understanding what lenders look for before you submit a package saves time and improves your odds of approval. Hotel lenders evaluate both the borrower and the property, which makes hotel lending more complex than standard business loans.

Borrower Qualifications

• Credit Score: Most hotel lenders require a minimum personal credit score of 680-700. SBA lenders may approve scores as low as 650 for borrowers with strong experience and collateral. CMBS lenders typically require 700+.
• Industry Experience: Lenders strongly prefer borrowers with prior hospitality management or hotel ownership experience. If you are new to hotel operations, partnering with an experienced operator or hiring a qualified general manager can offset this concern.
• Net Worth: Conventional hotel lenders typically require borrower net worth at least equal to the loan amount. SBA lenders have more flexible requirements but still evaluate overall financial strength.
• Liquidity: After closing, lenders want to see 10-15% of the loan amount in liquid reserves to cover initial operating shortfalls.
• Franchise Agreement: A signed or conditional franchise agreement from Choice Hotels is required before most hotel lenders will issue a commitment letter.

Property Qualifications

• DSCR (Debt Service Coverage Ratio): Most lenders require a minimum DSCR of 1.20-1.25x. For new construction or recent conversions, lenders will use pro forma projections rather than historical performance.
• RevPAR Index: Revenue Per Available Room relative to competitive set (RevPAR Index or RGI) should be at or above 100 for stabilized properties.
• Appraisal: A hospitality-focused MAI appraisal is required. Hotel appraisals use income approach as the primary valuation method, not comparable sales alone.
• Environmental Report: A Phase I Environmental Site Assessment is required for all hotel real estate loans. Phase II may be required if Phase I identifies potential issues.
• Market Study: For new construction and some conversion projects, a third-party market study analyzing demand generators, competitive set, and projected occupancy and ADR is required.

Documentation Checklist

Assemble these documents before approaching a lender:

1. Personal financial statements (past 3 years)
2. Business tax returns (past 3 years, if existing business)
3. Hotel P&L statements and STR reports (if acquiring existing property)
4. Pro forma financial projections (3-5 year model)
5. Franchise application confirmation or signed FDD
6. Site control documents (purchase agreement or LOI)
7. Construction budget and contractor bids (if applicable)
8. Resume and hotel experience documentation
9. Entity formation documents (LLC, LP, etc.)

As CNBC has reported in its coverage of small business lending, preparation is the single most important factor in loan approval success. Lenders who receive complete packages close up to 40% faster than those reviewing incomplete submissions.

How Crestmont Capital Helps MainStay Suites Investors

Crestmont Capital is a leading U.S. business lender with deep experience in hotel franchise financing. Unlike traditional banks that route hotel loan requests through generalist commercial loan officers, Crestmont works with hotel-experienced underwriters and a network of lenders who understand the unique dynamics of extended-stay hotel investment.

Our Hotel Financing Approach

Speed: Crestmont's streamlined application process delivers preliminary decisions in 24-48 hours. For hotel investors racing to close an acquisition, speed matters. Traditional bank timelines of 90-120 days are simply not competitive in today's market.

Flexibility: We work with borrowers across the credit spectrum, from experienced multi-property hotel investors to first-time franchise buyers with strong financial backgrounds. Our commercial financing solutions are customized to each deal rather than forced into rigid product templates.

Network: Crestmont has relationships with SBA-preferred lenders, CMBS conduits, private debt funds, and conventional banks that actively seek hotel loan volume. This network means we can match your specific deal with the most competitive financing available - rather than being limited to a single institution's appetites.

Expertise: Our team understands hotel-specific metrics like RevPAR, DSCR, ADR, and occupancy ramp curves. We speak the language of hotel finance and can help you prepare a package that resonates with hotel underwriters.

Loan Products Available Through Crestmont

• SBA 7(a) and 504 Hotel Loans
• Conventional Hotel Acquisition Loans
• Hotel Construction and Bridge Financing
• Business Lines of Credit for Hotel Operations
• FF&E Equipment Financing
• Hotel Refinancing and Cash-Out Refinancing

To see how we have helped other hotel franchise investors, read our guides on La Quinta franchise financing and Hyatt House franchise loans - both of which cover comparable capital structures and lender expectations.

Real-World Financing Scenarios

Theory is useful, but real-world examples make the financing process concrete. Below are three hypothetical scenarios that represent the most common types of MainStay Suites financing deals.

Scenario 1: First-Time Investor Acquiring an Existing Property

Situation: A commercial real estate investor with 10 years of multifamily experience wants to purchase an existing 80-room MainStay Suites in a secondary market for $4.2 million. The property has a 78% occupancy rate and generates $950,000 in annual gross room revenue.

Financing Structure:

• SBA 7(a) loan: $3.36 million (80% LTV)
• Borrower equity injection: $840,000 (20%)
• Rate: Prime + 2.75%, 25-year amortization
• Monthly P&I: approximately $18,500
• DSCR: 1.38x (strong coverage)

Outcome: SBA 7(a) financing approved in 67 days. The investor's multifamily experience combined with the property's strong occupancy history satisfied lender criteria despite no prior hotel ownership.

Scenario 2: Ground-Up New Construction

Situation: An experienced hotel operator with two existing Choice Hotels properties wants to build a new 100-room MainStay Suites in a growing suburb. Total project cost is estimated at $8.5 million including land, construction, FF&E, and pre-opening costs.

Financing Structure:

• SBA 504 first mortgage (conventional): $4.25 million (50%)
• SBA 504 debenture: $3.4 million (40%)
• Borrower equity (land contribution + cash): $850,000 (10%)
• Separate FF&E equipment line: $350,000
• Construction loan converts to permanent on certificate of occupancy

Outcome: The SBA 504 structure allowed the investor to preserve significant equity for a second project while locking in a long-term fixed rate on the debenture portion.

Scenario 3: Property Conversion with PIP

Situation: A hotel group acquires a 90-room independent extended-stay property for $2.8 million and spends $1.2 million converting it to MainStay Suites standards per the approved PIP. Total project cost: $4 million.

Financing Structure:

• Bridge loan (12 months): $3.2 million covering acquisition and renovation
• Borrower equity: $800,000
• At stabilization (Month 13), refinanced into conventional hotel loan at $3.0 million
• Business line of credit: $200,000 for operating capital during ramp period

Outcome: Bridge-to-permanent structure allowed the group to execute a complex conversion deal without waiting for permanent financing upfront.

Next Steps to Secure Your MainStay Suites Loan

Frequently Asked Questions

Conclusion

Financing a MainStay Suites franchise is a significant undertaking - but it is one of the most defensible hotel investments in the market today. The extended-stay segment's structural demand drivers, lower operating cost profile, and strong brand recognition through Choice Hotels International make MainStay Suites an attractive asset class for both first-time hotel investors and experienced multi-property operators.

The key to a successful financing outcome is preparation: understand your total capital requirements, know which loan products align with your project type and financial profile, and work with a lender who speaks the language of hotel finance. Whether you need an SBA 7(a) loan for your first acquisition, a construction loan for a ground-up build, or a bridge-to-permanent structure for a conversion project, Crestmont Capital has the expertise and lender relationships to deliver.

The extended-stay hotel market is growing. Demand from corporate relocations, project-based workers, and traveling professionals continues to expand. MainStay Suites is a proven brand with a clear niche and a franchisor committed to franchisee success. With the right financing strategy - and the right lending partner - your MainStay Suites investment can generate strong returns for decades to come.

Ready to take the first step? Apply now at Crestmont Capital and connect with a hotel lending specialist who can structure your MainStay Suites franchise loan from day one.

Disclaimer: The information provided in this article is for general educational purposes only and is not financial, legal, or tax advice. Franchise costs, loan terms, interest rates, and lender requirements vary and are subject to change. Always consult with a qualified financial advisor, attorney, and certified public accountant before making investment or financing decisions. Crestmont Capital is a commercial lender and does not provide franchising, legal, or investment advisory services.