How to Finance a Cobblestone Hotels Franchise: Small-Town Builds
By Anthony Cornella
A Cobblestone Hotels franchise loan is usually a real estate loan first and a franchise loan second. The brand was built to bring branded lodging to small communities that larger chains pass over, so most owners are financing land, a new building or a conversion, furniture and fixtures, and the working capital to open a hotel in a market with limited comparable data.
This article explains what the brand offers, how its small-market prototype changes the financing conversation, what the SBA Franchise Directory note on management agreements means for Cobblestone owners, and how lenders evaluate new builds, conversions and acquisitions.
US Professional Funding is not affiliated with, sponsored by or endorsed by Cobblestone Hotels; the name is used only to describe the business. Figures from the franchisor’s disclosure document and materials can change, loan programs and terms vary by lender and borrower, and every loan is subject to review and approval. Nothing here is legal, tax or investment advice; review the current Franchise Disclosure Document (FDD) and franchise agreement with a qualified franchise attorney and accountant.
Cobblestone Hotels Franchise Loan at a Glance
- Franchisor: Cobblestone Hotels, LLC, headquartered in Neenah, Wisconsin.
- History: the first Cobblestone Inn & Suites opened in January 2008 in Clintonville, Wisconsin.
- System size: more than 160 locations open or under construction and more than 50 under development, across 29 states, according to the company.
- Prototype: the original Cobblestone Inn & Suites was designed as a 31-unit hotel for markets too small for a typical branded property.
- Brand family: upscale Main Street hotels, upper-midscale Cobblestone Hotel & Suites and Cobblestone Inn & Suites, midscale Boarders Inn & Suites by Cobblestone Hotels and upper-midscale extended-stay Riverstone Suites.
- Fees and investment: not published on the franchisor’s website; the company provides its 2026 FDD on request. Read Items 5, 6 and 7.
- SBA Franchise Directory: listed as “Cobblestone Inn & Suites / Cobblestone Hotel & Suites” (code S0398), with a note on third-party management agreements.
What Is Cobblestone Hotels?
The brand grew out of a 2007 road trip by Brian Wogernese, now President and CEO, who noticed that small towns between Sioux Falls, South Dakota and Oshkosh, Wisconsin had few modern lodging options. The company says larger brands would not consider a hotel of fewer than 65 units, so Cobblestone designed a 31-unit prototype. The first Cobblestone Inn & Suites opened in Clintonville, Wisconsin, in January 2008.
Today the company reports more than 160 locations open or under construction in 29 states and more than 50 more under development. Each hotel is independently owned and operated.
Brands and formats. The company’s development materials describe several tiers:
- Upscale Main Street: downtown hotels with design elements drawn from local history, with full-service opportunities. A sample 54-unit layout includes a pool, fitness room, breakfast area, business center, meeting room and guest laundry.
- Upper midscale (Cobblestone Hotel & Suites and Cobblestone Inn & Suites): modern hotels for smaller communities, with optional meeting space and beer and wine bars. The original Inn & Suites offered an on-site lounge, hot breakfast, Wi-Fi and a fitness room.
- Midscale (Boarders Inn & Suites by Cobblestone Hotels): positioned for owners who already have a modern, amenity-focused hotel and want to join the system.
- Upper midscale extended stay (Riverstone Suites): rooms with kitchenettes that include a stovetop, sink, full-size refrigerator and microwave.
Guests can join the Cobblestone Rewards loyalty program.
Why lenders view Cobblestone the way they do. Lenders like a branded hotel with a reservation system, loyalty program and design standards. The challenge is the market: small towns may have little hotel sales history and few comparable properties for an appraisal, so lenders lean heavily on a feasibility study, the local demand drivers and the borrower’s strength.
Cobblestone Hotels Franchise Costs
The franchisor’s website does not publish fees or an investment range, and the company provides its 2026 FDD on request. Because a hotel’s cost depends on land, room count, brand, construction market and amenities, Item 7 is the place to start, followed by your own contractor bids.
Initial franchise fee. Item 5 states the application or initial fee and whether it differs by brand or for conversions. Confirm whether any part is refundable if the project does not proceed.
Land and construction. For a new-build Cobblestone, land and vertical construction are the largest costs. The company’s development materials say a preferred general contractor offers site selection, help raising equity and financing, and end-to-end construction services from zoning through the pre-opening punch list. Owners can use that service or their own contractor; either way, a lender will want a fixed or guaranteed-maximum-price contract and a contingency.
Furniture, fixtures and equipment (FF&E). Guest room furniture, televisions, breakfast and laundry equipment, fitness equipment, bar fixtures where offered, and kitchenette appliances in extended-stay rooms all fall here, along with operating supplies and equipment.
Opening costs and working capital. Budget for pre-opening payroll, training, marketing, supplies, insurance and a ramp-up reserve. In a small market, stabilization depends on local employers, events and travel, so plan generously.
Total investment. Use the current Item 7 table for each brand you are considering. Line items to expect include:
- Initial franchise or application fee
- Land or site acquisition
- Architectural, engineering and permitting costs
- Construction or conversion costs
- FF&E and operating supplies
- Signage and brand technology
- Training and pre-opening expenses
- Insurance, deposits and professional fees
- Additional funds for the initial operating period
Ongoing Fees and How They Affect Your Loan
Item 6 of the FDD lists royalties, marketing or brand fund contributions, reservation and technology fees, loyalty program charges and transfer and renewal fees. Hotel fees are usually tied to room revenue, so they scale with performance, but they come off the top before debt service.
How lenders factor fees in. Lenders sizing a Cobblestone Hotels franchise loan build a pro forma from projected occupancy and average daily rate, subtract departmental costs, franchise fees, management fees, property taxes, insurance and a reserve for replacing FF&E, then test whether the remaining cash flow covers the loan payment with room to spare. Small-market hotels may have thinner revenue in shoulder seasons, so lenders stress-test those months.
Franchisor Requirements for New Owners
Cobblestone’s website does not publish minimum net worth or liquidity requirements. Expect the franchisor to review your financial strength, experience and site, and to approve the project before you sign. The company describes training through onsite sessions, classroom instruction and webinars, plus development and operational support from feasibility through opening.
The approval process. Expect a site review, FDD review, franchise application and approval, and plan review before construction or conversion. Keep your lender informed, since each step feeds the loan approval.
Ways to Own a Cobblestone Hotel
New construction. The small-town prototype is designed for new construction in smaller communities. Financing typically involves a construction loan that converts to permanent financing once the hotel opens. Our page on hotel start-up financing explains how we approach new properties.
Conversion to Boarders Inn & Suites. The midscale Boarders brand is aimed at owners of existing modern hotels. A conversion loan may finance the property-improvement work, signage, FF&E updates and brand technology needed to meet standards. Read more about conversion franchise financing.
Buying an existing Cobblestone hotel. An acquisition gives the lender actual operating history, which often makes underwriting easier than a new build. The buyer must be approved by the franchisor and may face property-improvement requirements at transfer. See our page on hotel acquisition financing.
Financing Options for a Cobblestone Hotels Franchise
SBA 504 loans. The SBA 504 program is built for owner-occupied real estate and long-lived assets, which makes it a strong match for land and new construction. A 504 structure pairs a senior loan with a second loan through a Certified Development Company, and it is often used for hotel construction and acquisitions.
SBA 7(a) loans. An SBA 7(a) loan can combine real estate, FF&E, franchise fees and working capital in a single loan. The program maximum is currently $5 million, though program rules can change, so the right SBA program depends on project size and mix.
Conventional loans. A conventional business loan may suit experienced owners, larger Main Street projects or deals that exceed SBA limits. Construction and permanent terms vary, and every request is subject to underwriting.
FF&E and equipment financing. Owners can finance FF&E packages, laundry and breakfast equipment, fitness equipment and kitchenette appliances separately, which can preserve cash for the construction budget or a future renovation. Our article on hotel PIP financing covers renovation-driven requirements.
Working capital and lines of credit. A new small-market hotel needs cash for pre-opening payroll and the ramp-up. Established hotels may need help with seasonal dips and capital projects. Learn more about hotel working capital.
Seller financing on resales. In some acquisitions, a seller may carry part of the price. A seller note must be acceptable to the senior lender, is typically subordinate to it, and SBA programs may limit how it is structured.
SBA Loans for Cobblestone Hotels Franchisees
SBA lending for franchises runs through the SBA Franchise Directory, a list of brands whose franchise agreements have been reviewed for SBA eligibility. A listing clears the franchise relationship for SBA review; it does not approve any borrower or project.
Cobblestone’s listing. The directory lists “Cobblestone Inn & Suites / Cobblestone Hotel & Suites” under code S0398. If you are considering Boarders Inn & Suites, Riverstone Suites or a Main Street hotel, confirm with your lender whether the listing covers that brand’s agreement before planning on SBA financing.
The management-agreement note, in plain English. The directory adds this condition: if the applicant also operates under a management agreement with a third party, the lender or Certified Development Company must review that agreement under the SBA’s standard operating procedures to decide whether the applicant and the management company are affiliated. The applicant is not eligible if the management company is, or is affiliated with, the franchisor.
What that means in practice:
- If you will run the hotel yourself, the note generally does not come into play.
- If you hire a management company, expect the lender to review the management agreement closely, including control, fees and termination rights.
- If the management company is the franchisor or an affiliate of the franchisor, the deal is not eligible for SBA financing.
Cobblestone’s development materials point owners to a preferred hotel management company and a preferred general contractor, and they do not describe either as an affiliate. Before you sign a management agreement, ask the franchisor and the management company to confirm in writing whether any affiliation exists, and share that confirmation with your lender. Our article on SBA loans for hotels compares 7(a) and 504 in more detail.
SBA application tips. An SBA-backed Cobblestone Hotels franchise loan request should include a feasibility study, construction budget and contract, franchise application or approval, personal financial statements and tax returns, a hotel resume or management plan, and any management agreement you plan to sign. Our SBA loan calculator can help with early payment estimates, which are for planning only and are not an offer or approval.
How Lenders Evaluate a Cobblestone Hotels Deal
Personal credit and financial history. Lenders review credit, tax returns and a personal financial statement, and typically require personal guarantees from significant owners.
Net worth and liquidity. Hotel construction carries cost-overrun and lease-up risk, so lenders look for equity in the project plus reserves after closing.
Industry and management experience. Prior hotel ownership or management strengthens a request. First-time owners may pair with experienced management, which brings the SBA management-agreement review into play. Our article for first-time hotel buyers covers experience requirements and third-party management.
Business plan and projections. In a small market, projections should be grounded in a feasibility study that identifies demand from local employers, hospitals, schools, events and highway traffic, and should show a realistic ramp to stabilization.
The FDD and franchise agreement. Lenders review the term, renewal, transfer conditions and any area protection, along with whether Item 19 contains financial performance representations. Review those items in the current FDD yourself.
Site and real estate. Expect an appraisal, environmental review, survey and title work. In a small town, the appraiser may have few comparable sales, so a strong feasibility study helps support value.
Historical financials for acquisitions. For an existing hotel, expect several years of operating statements, monthly occupancy and rate reports, tax returns and any brand quality reports.
Building a Small-Market Hotel: Construction and FF&E
The 31-unit prototype is the heart of the Cobblestone model: a branded hotel sized for markets that cannot support a larger property. That size keeps the total project smaller, but construction risk still sits with the owner. Lenders will look for a qualified contractor, a complete budget with contingency, builder’s risk insurance and a draw schedule tied to inspections.
FF&E is a meaningful part of the budget and wears out on a cycle. Plan for periodic replacement of soft goods and case goods, and build an FF&E reserve into your projections from day one.
Multi-Unit Growth and Development
An owner who succeeds with one Cobblestone hotel may look at nearby communities next. Each new hotel is usually financed as its own project, but lenders give credit for the owner’s track record and the operating cash flow of existing hotels. As a portfolio grows, owners may refinance stabilized hotels to fund equity in the next project.
Real-World Scenarios
A local business owner building a first hotel. A business owner in a small Midwestern town partners with an experienced hotel operator to build a Cobblestone Inn & Suites. An SBA 504 loan finances the land and building, FF&E is financed separately, and the lender reviews the management agreement for affiliation before approving.
An independent hotel converting to Boarders. The owner of a modern independent hotel joins the system as a Boarders Inn & Suites and finances signage, FF&E updates and brand technology with a conventional loan.
An investor buying an operating Cobblestone. An investor buys a stabilized Cobblestone Hotel & Suites. Because the hotel has operating history, the lender underwrites actual results and the franchisor approves the transfer.
Common Mistakes to Avoid
- Assuming every Cobblestone brand is covered by the SBA directory listing without confirming
- Signing a management agreement before checking for affiliation with the franchisor
- Skipping a feasibility study in a market with few comparable hotels
- Underbudgeting construction contingency and pre-opening working capital
- Ignoring the FF&E replacement cycle in long-term projections
- Projecting stabilized occupancy from opening day
For more lodging-specific pitfalls, read the hotel loan mistakes that cost owners the most.
Next Steps to Finance Your Cobblestone Hotels Franchise
Step 1: Request the current FDD. Review Items 5, 6, 7, 17 and 19 for each brand you are considering with a franchise attorney and accountant.
Step 2: Identify your site and brand. Decide between new construction, a conversion or an acquisition, and which brand fits the market.
Step 3: Commission a feasibility study. Use it to support projections and the appraisal.
Step 4: Decide who will manage the hotel. If you plan to use a management company, confirm in writing that it is not affiliated with the franchisor.
Step 5: Talk with a financing specialist. Compare SBA 504, SBA 7(a) and conventional structures for your project.
Step 6: Build your loan package. Gather the budget, contractor agreement, franchise approval, feasibility study, financial statements and management plan.
Step 7: Close, build and open. Follow the draw schedule, keep reserves for the ramp-up and plan for your first FF&E refresh.
Cobblestone Hotels Franchise Loan FAQs
How much does it cost to build a Cobblestone hotel?
The franchisor does not publish an investment range on its website. The cost depends on land, brand, room count and construction market; Item 7 of the current FDD gives the franchisor’s estimates.
What is the Cobblestone Hotels franchise fee?
Fees are disclosed in Item 5 of the FDD, which the company provides on request. Confirm whether fees differ by brand or for conversions.
How many rooms does a Cobblestone hotel have?
The original Cobblestone Inn & Suites prototype was designed with 31 units, and the company’s materials show a 54-unit Main Street layout. Room counts vary by brand and market.
Can I get an SBA loan for a Cobblestone hotel?
Cobblestone Inn & Suites and Cobblestone Hotel & Suites are listed on the SBA Franchise Directory under code S0398. SBA eligibility also depends on the borrower, the project and the management-agreement review described above.
Can I use a management company with an SBA loan?
Yes, but the lender must review the agreement for affiliation, and the deal is not eligible if the management company is, or is affiliated with, the franchisor.
Can I convert my existing hotel?
The company positions Boarders Inn & Suites by Cobblestone Hotels for owners of existing modern hotels. Conversion costs and requirements are in the FDD.
Does Cobblestone offer financing?
The company’s materials say its preferred general contractor can assist with raising equity and acquiring financing. Item 10 of the FDD states whether the franchisor offers any direct or indirect financing.
Can I buy an existing Cobblestone hotel?
Yes, with franchisor approval. Lenders underwrite the hotel’s historical results, and property-improvement requirements may apply at transfer.
What documents will a lender ask for?
Personal financial statements and tax returns, a feasibility study, construction budget and contract or purchase agreement, franchise approval, management agreement and projections.
Final Thoughts
Cobblestone built its brand around small communities, and financing one of its hotels rewards the same local focus. Owners who ground their projections in a solid feasibility study, budget conservatively for construction and opening, confirm SBA eligibility for their specific brand and check any management agreement for franchisor affiliation give their Cobblestone Hotels franchise loan the best chance of a smooth approval.
US Professional Funding helps hotel owners and franchise buyers finance construction, acquisitions, renovations, working capital and refinancing. Learn more about our franchise financing and hotel and motel financing solutions.
