How to Finance a LivSmart Studios Franchise: SBA’s 30-Day Rule
By Anthony Cornella
A LivSmart Studios franchise loan finances a newly built, midscale extended-stay hotel designed for guests who stay for weeks or months. That long-stay focus is the brand’s selling point, and it is also the reason SBA financing needs careful planning, because the SBA Franchise Directory listing for this brand carries a revenue test tied to stays of 30 days or less.
This article walks through the 2026 LivSmart Studios by Hilton Franchise Disclosure Document (FDD), the brand’s prototype costs, how the directory notes affect SBA eligibility, and how developers combine construction, SBA, conventional and FF&E financing.
US Professional Funding is not affiliated with, sponsored by or endorsed by LivSmart Studios by Hilton; the name is used only to describe the business. Figures from the franchisor’s disclosure document can change, loan programs and terms vary by lender and borrower, and every loan is subject to approval. Nothing here is legal, tax or investment advice; review the current FDD and franchise agreement with a franchise attorney, accountant and hotel consultant.
LivSmart Studios Franchise Loan at a Glance
- Franchise application fee: $100,000 for new development, conversion, change of ownership or re-licensing, according to the 2026 FDD (issued March 30, 2026).
- Royalty: 6% of Gross Rooms Revenue, paid monthly.
- Program fee: 2.5% of Gross Rooms Revenue, which the franchisor may change.
- Estimated initial investment: $16,299,093 to $24,047,210 for a newly constructed 121-guestroom hotel, excluding real property, including up to $235,017 paid to the franchisor or its affiliates.
- Brand size: 7 hotels open, 500+ rooms and 60+ hotels in development, according to the brand’s fact sheet updated October 2026.
- Net worth and liquidity: the FDD sections we reviewed do not publish a fixed minimum; the franchisor evaluates each applicant and project.
- SBA Franchise Directory: listed as LivSmart Studios by Hilton, with notes on management agreements and on revenue from stays of 30 days or less.
What Is LivSmart Studios by Hilton?
LivSmart Studios by Hilton is a long-stay hotel brand that launched under the working name Project H3 by Hilton. The FDD says the hotels compete in the midscale extended-stay segment against national extended-stay chains and independent local hotels, and that they serve business travelers, families, vacationers and others who need extended stays. The current franchisor, Hilton Franchise Holding LLC, became the franchisor of the brand on January 9, 2024.
The first LivSmart Studios opened in July 2025 in Tullahoma, Tennessee, as an 89-room property, and the brand has since opened hotels in markets such as Huntsville, Clarksville, Columbia, Salt Lake City and Pensacola. Hilton describes the brand as built for long-stay travelers on the road for weeks or months, including traveling professionals, workers on extended assignments, traveling nurses and relocating families, with stays of 10 nights or more in mind.
The product. Each suite has four areas to rest, work, cook and refresh, and a fully equipped kitchen with a full-size refrigerator, dishwasher, microwave and two-burner cooktop. Public spaces include a bright lobby with views into the laundry and fitness areas, an on-site market, a package and food delivery area, and an outdoor patio with fire pits and grills.
Why lenders view the brand the way they do. Hilton describes the prototype as cost-effective to build and easy to operate, with a streamlined footprint and a simplified staffing model. Lenders like that, but with a short operating history they lean heavily on market feasibility and the sponsor’s experience.
LivSmart Studios Franchise Costs
Franchise application fee. The 2026 FDD sets the application fee at $100,000 for a new development or conversion, a change of ownership or re-licensing, paid with the application. If an applicant withdraws before approval or is denied, the fee is refunded less a $7,500 processing fee, which may be waived or reduced. In 2025, franchisees paid application fees ranging from $0 to $100,000 for new development or conversion, so incentives do occur and should be disclosed to your lender.
Construction and design. The Item 7 table for a 121-room hotel estimates construction and leasehold improvements at $11,500,000 to $16,750,000 and design and engineering fees at $460,000 to $670,000. These are the largest pieces of the budget and are usually funded with a construction loan.
FF&E and operating equipment. Furniture, fixtures and equipment are estimated at $1,600,000 to $2,400,000, with inventory and operating equipment at $193,500 to $279,500. Every suite has a kitchen, so appliances make up a meaningful share.
Total investment. The 2026 FDD cover page estimates the total investment to begin operating a newly constructed 121-guestroom LivSmart Studios at $16,299,093 to $24,047,210, excluding real property. The Item 7 table includes these lines among others:
- Franchise application fee: $100,000
- Construction and leasehold improvements: $11,500,000 to $16,750,000
- Design and engineering fees: $460,000 to $670,000
- Furniture, fixtures and equipment: $1,600,000 to $2,400,000
- Inventory and operating equipment: $193,500 to $279,500
- Signage: $43,500 to $63,000
- Computer hardware and software systems: $43,331 to $99,112
- Guest internet access system: $58,107 to $84,918
- Connected Room system: $28,905 to $34,545
- Required pre-opening training: $5,000 to $15,000
- ADA consultant fee: $2,500 to $10,000
- Market study, environmental assessment and real property: varies
- Insurance, pre-opening expenses and additional funds: see the full table
Land or a ground lease is on top of the cover page total. Compare Item 7 with your contractor’s bids.
Ongoing Fees and How They Affect Your Loan
Royalty and program fee. The 2026 FDD sets the monthly royalty at 6% of Gross Rooms Revenue and the program fee at 2.5% of Gross Rooms Revenue.
Loyalty and reservations. Owners participate in the Hilton Honors program, and the FDD lists a frequent traveler fee of 1.7% of the total eligible guest folio, with some exceptions. Other reservation-related charges are listed in Item 6.
Technology fees. Current monthly charges include OnQ connectivity of $400 to $600, OnQ hardware and software maintenance of $1,095 to $2,389 and Connected Room maintenance of $529 to $815, plus per-user email charges.
Compliance and change fees. The FDD lists a $10,000 PIP fee for conversions, changes of ownership, re-licensing and certain renovations, a room addition fee of $400 per added guest room, a brand non-compliance fee of $65 to $145 per approved guest room capped at $50,000 per six-month period, and a $5,500 permitted transfer processing fee. A lender comfort letter carries a $3,500 processing fee.
How lenders factor fees in. Royalty, program, loyalty and technology charges come off the top before payroll, utilities and debt service. Lenders build them into the pro forma and test whether net operating income covers the loan payment with a cushion at conservative occupancy and rate assumptions.
Franchisor Requirements for New Owners
The FDD sections we reviewed do not publish a fixed minimum net worth or liquid capital requirement. The franchisor reviews each application on its merits, including financial capacity, hotel experience, the proposed site and the management plan. Franchise approval and loan approval are separate processes that usually run in parallel.
- Development standards: construction must follow the prototype and brand standards on the franchisor’s schedule, with fees for extensions.
- Training: required pre-opening training is part of the Item 7 budget.
- Management: owners may self-manage or hire a management company, and that choice matters for SBA eligibility.
- Lender coordination: lenders typically request a comfort letter from the franchisor before closing.
Ways to Own a LivSmart Studios
New development. Because the brand is new, nearly every LivSmart Studios is a ground-up project built to the prototype. The owner secures a site, obtains franchise approval, completes design and permitting, and finances construction. Our page on new hotel development financing outlines how these projects come together.
Conversion. The FDD prices a conversion application at the same $100,000 fee and provides for a PIP. A conversion requires an existing building that can deliver the suite and kitchen layout the brand calls for.
Buying an existing LivSmart Studios. As the brand matures, resales will become possible. A change of ownership carries the $100,000 application fee and a PIP review. Learn more about hotel acquisition financing.
Financing Options for a LivSmart Studios Franchise
Construction loans. Ground-up projects are typically funded with a construction loan advanced in draws as work is completed, followed by permanent financing once the hotel stabilizes.
SBA 7(a) loans. The SBA 7(a) program can finance hotel real estate, construction, FF&E and working capital for eligible owner-operators, but its program cap means it often covers only part of a new LivSmart Studios budget.
SBA 504 loans. The SBA 504 program fits owner-occupied real estate and long-lived assets, making it a common consideration for hotel construction. A 504 structure pairs a first-lien loan with a second-lien loan through a certified development company and the borrower’s equity.
Conventional term loans. Many hotel projects use conventional business loans sized to projected net operating income, appraised value and sponsor strength. Conventional financing is also the fallback when a project cannot meet the SBA directory notes described below.
FF&E financing. Suite furniture, kitchen appliances, commercial washers and dryers, fitness equipment and in-room technology can be financed with equipment loans or folded into the construction loan.
Working capital and lines of credit. A new hotel needs cash for pre-opening payroll, marketing and supplies, and for the months before occupancy builds. See our hotel working capital options.
Renovation and PIP financing. Conversions and future changes of ownership bring PIPs. Our article on financing brand-required renovations explains the options.
Seller financing on acquisitions. On a future resale, a seller may carry part of the price. Any seller note must be acceptable to the senior lender, is typically subordinate to it and may be restricted by SBA rules.
SBA Loans for LivSmart Studios Franchisees
SBA lenders generally require a franchise brand to appear on the SBA Franchise Directory before making an SBA-guaranteed loan to a franchisee. A listing lets a lender consider the request; it does not approve any borrower or project. Our overview of SBA loans for hotels compares how 7(a) and 504 work for lodging.
The brand’s listing. LivSmart Studios by Hilton appears on the SBA Franchise Directory under codes S8393 and S8734, which are duplicate listings for the same brand. The listing carries two notes.
Note 1: management agreements. If the applicant operates under a management agreement with a third party, the lender or certified development company must review it under SBA rules 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. In practice, SBA borrowers must self-manage or use an independent management company.
Note 2: the 30-day revenue test. The lender must review the applicant’s revenue or projected revenue, and the applicant is eligible only if more than 50% of revenue for the prior year came from transient guests staying 30 days or less at a time. For a start-up, projections must show the same. This note matters for a brand built around stays of weeks or months. A hotel whose guests mostly stay longer than 30 days can start to look like residential housing rather than a hotel business. Your feasibility study and projections should break out the expected length-of-stay mix, and your lender will test that the majority of revenue comes from stays of 30 days or less.
Program limits and tips. The SBA 7(a) program maximum is currently $5 million, though program rules can change. Because a new LivSmart Studios budget is larger, developers often look at SBA 504 or conventional construction financing. An SBA loan calculator can help with rough payment estimates, which are not an offer or approval.
How Lenders Evaluate a LivSmart Studios Deal
Personal credit and financial history. Lenders reviewing a LivSmart Studios franchise loan check credit, tax returns and personal financial statements for each significant owner, and usually require personal guarantees.
Net worth and liquidity. Owners need to fund their equity contribution and still hold reserves for construction overruns and a slow ramp-up.
Hotel experience and management. Prior hotel ownership or management experience strengthens a request, and first-time owners usually need an experienced independent manager. Our article for first-time hotel buyers explains how lenders view experience.
Business plan and projections. Projections should model occupancy, average daily rate and length of stay through stabilization, along with the 6% royalty, 2.5% program fee, the Honors fee, technology fees, management fees and an FF&E reserve. Review Item 19 of the current FDD to see whether it includes financial performance representations, and lean on a third-party feasibility study since the brand’s history is short.
The FDD and franchise agreement. Lenders read the franchise term, transfer provisions, termination rights and liquidated damages, and generally want the franchise to run at least as long as the loan. The FDD lists liquidated damages for termination before opening of $10,000 multiplied by the approved guest rooms.
Real estate and site. Expect an appraisal, environmental report and review of zoning, access and parking. Lenders will study nearby long-stay demand generators.
Long-Stay Operations and FF&E
The long-stay model shapes both the budget and the cash flow. In-suite kitchens mean recurring appliance replacement, and shared laundry and fitness spaces see heavy use. Lenders typically require an FF&E reserve funded from operations so future replacements do not depend on new borrowing.
Multi-Unit Growth and Development Agreements
With 60+ hotels in development and only a handful open, the brand is in its build-out phase, and many developers plan more than one hotel.
Financing a second or third hotel. Once the first hotel stabilizes, lenders can underwrite its performance alongside the next project. Each hotel is usually financed with its own loan and ownership entity. Our article on financing a second hotel covers that transition.
Real-World Scenarios
A developer near a manufacturing hub. An experienced select-service developer builds a LivSmart Studios near a large plant that brings in contract workers. Feasibility shows a mix of shorter project stays and longer assignments, so the developer pursues an SBA 504 structure after interim construction financing.
A project with mostly monthly stays. Another developer’s market study shows most demand would come from stays longer than 30 days. Because that would fail the SBA revenue test, the developer uses conventional construction and permanent financing instead.
An owner choosing management. A first-time hotel investor hires an independent management company with extended-stay experience so the deal can still be considered for SBA financing.
Common Mistakes to Avoid
- Assuming SBA eligibility without modeling revenue from stays of 30 days or less
- Treating the FDD’s investment range as the full budget when it excludes land
- Choosing franchisor-affiliated management while planning on SBA financing
- Leaving out Honors, technology and program fees in projections
- Underfunding pre-opening costs and the ramp-up period
- Skipping a feasibility study for a brand with a short track record
For more pitfalls, read the hotel loan mistakes that cost owners the most.
Next Steps to Finance Your LivSmart Studios Franchise
Step 1: Define the project. Identify a site with strong long-stay demand drivers.
Step 2: Review the FDD with advisors. Study the fee, investment, term and transfer items with a franchise attorney and accountant.
Step 3: Commission a feasibility study. Include occupancy, rate and length-of-stay mix.
Step 4: Choose your management approach. Self-manage or hire an independent manager, keeping the SBA notes in mind.
Step 5: Talk with a financing specialist early. Compare construction, SBA 504, 7(a) and conventional structures for your LivSmart Studios franchise loan.
Step 6: Apply for franchise and loan approval in parallel. Keep both timelines aligned with design and permitting.
Step 7: Close, build and open. Fund equity, complete construction and keep working capital for the ramp-up.
LivSmart Studios Franchise Loan FAQs
How much does it cost to build a LivSmart Studios?
The 2026 FDD estimates $16,299,093 to $24,047,210 for a newly constructed 121-guestroom hotel, excluding real property.
What is the LivSmart Studios franchise fee?
The franchise application fee is $100,000 for new development, conversion, change of ownership or re-licensing.
What royalty and program fees apply?
The 2026 FDD lists a 6% royalty and a 2.5% program fee, both on Gross Rooms Revenue, plus a 1.7% Honors fee on the eligible guest folio and technology charges.
How much net worth or liquidity do I need?
The FDD sections we reviewed do not state a fixed minimum. The franchisor reviews each applicant, and lenders expect enough liquidity for equity and reserves.
Is LivSmart Studios eligible for SBA loans?
Yes, the brand is on the SBA Franchise Directory. But the applicant must show that more than 50% of revenue comes from guests staying 30 days or less, and it cannot use a franchisor-affiliated management company.
Can a first-time hotel owner get a LivSmart Studios franchise loan?
Possibly, with strong liquidity, an experienced independent management company and a solid feasibility study.
Can I finance FF&E separately?
Often, yes. Suite furniture, kitchen appliances and laundry and fitness equipment can be financed separately or included in the construction loan.
Can I convert an existing hotel?
The FDD provides for conversions at the same $100,000 application fee, subject to a PIP and franchisor approval.
How many LivSmart Studios hotels are open?
The brand’s October 2026 fact sheet lists 7 hotels open and 60+ in development.
Does the franchisor offer financing?
Review Item 10 of the current FDD for any financing the franchisor offers. Most developers arrange construction and permanent financing independently.
Final Thoughts
LivSmart Studios combines a lean, long-stay hotel with a sizable construction budget and a young track record. Developers who model the length-of-stay mix against the SBA revenue test, choose a management structure that fits their financing and plan beyond the FDD’s estimate for land and contingencies give themselves the strongest footing.
US Professional Funding helps hotel owners and developers finance construction, acquisitions, renovations, FF&E and working capital for branded properties. Learn more about our franchise financing and hotel and motel financing solutions.
