Minibar and Loan Market Update from Bridge, May 2026

My name is Rohit Mathur (still typing these myself though I let Claude write one section again this month… see if you can spot it this time) I’m the co-founder and CEO of Bridge, a direct lender and marketplace for hotel loans. Before founding Bridge, I spent 10+ years at Citi in capital markets.

This month: a look at where we are now — multi-year journey through rates and sentiment, what the Fed is signaling, plus new SBA limits, a new featured close in Port Arthur.

TLDR: What’s Moving in the Loan Market

• Where Are We Now: SOFR is at 3.60%, down 170 bps from two years ago. The Fed is signaling the cutting cycle is basically done. Sentiment has moved from “Paralysis” to “Optimistic, Cautious.”
• Don’t Wait For More Cuts: FOMC March projections show only ~35 bps of cuts left between now and year-end 2028. The cheap-money relief everyone was waiting for is not coming. Underwrite to today’s rates.
• Did the SBA DOUBLE limits for loans?: In reality, the answer is “kind of”. Instead of a doubling of the 7a limit, they are now counting 7a and 504 as separate limits so you can stack the loans, see more details below.
• Featured Deal: Ground-up construction close in Port Arthur, TX. Details below.

Where Are We Now

This is the section I’ve wanted to write for a while. We get asked some version of the same question on almost every call: “Are rates going to come down? Should I wait?” The honest answer requires looking back at how we got here — and forward at where the Fed thinks we’re going. Three charts tell that story.

1. The Multi-Year Journey: From Paralysis to Cautious Optimism

Markets don’t move in straight lines and neither does sentiment. Here’s how the last ~2.5 years have actually felt to those of us underwriting deals every week, plotted against the 5-year Treasury:

Source: Bridge analysis; 5-year Treasury via Federal Reserve H.15

A few things stand out to me looking back at this chart:

• Paralysis (early 2024): rates pinned in the 5.25–5.40% range for nearly a year. Deals weren’t happening because nobody could make the math work. Sellers wouldn’t accept new cap rates; buyers couldn’t pay old prices.
• Bullish (late 2024): Fed cut 50 bps, then the election cleared and there was real optimism going into 2025. We thought we were off to the races.
• Sharp negative → Fear (Q1–Q3 2025): Tariffs hit, travel from Canada and Europe softened, RevPAR went flat to down, and the rate cuts everyone was promised never showed up. This was the toughest stretch.
• Acceptance (Q4 2025): Developers stopped waiting. The Lodging Conference takeaway was essentially “costs aren’t coming down, I’m starting my project.”
• Improving → Cautious → Optimistic, Cautious (2026): Fed cuts resumed, then paused. The Iran situation reminded everyone that geopolitics can still move rates. But deal flow is up, lenders are competitive, and developers are moving forward.

The takeaway: we have lived through every regime in the last 2.5 years — and the only sponsors who came out ahead are the ones who kept moving when their underwriting worked. The ones who waited for the perfect window are still waiting.

2. Where Floating Rates Have Landed: SOFR at 3.60%

If you have a floating-rate loan — and most construction and bridge loans are floating — this is the chart that matters:

Source: Federal Reserve Bank of New York via FRED

SOFR sits at 3.60% today, down from 5.30% two years ago. That’s 170 bps of relief; real money on a floating-rate loan. On a $15M construction loan, that’s roughly $255,000 a year in interest savings vs. the 2023 peak.

But here’s the trap: that drop is mostly behind us. The next chart explains why.

3. What the Fed Is Telling You About the Future: Cuts Are (Mostly) Done

The March 2026 FOMC Summary of Economic Projections is the clearest signal we have about where rates are going. Read it carefully:

Source: Federal Reserve H.15, FOMC March 2026 Summary of Economic Projections

What the dots are saying:

• Current target: 3.50–3.75%. Already 175 bps lower than the cycle peak.
• End of 2026 median: 3.40%. That’s ~25 bps of additional cuts implied for the rest of this year. Not 100 bps. Not 75 bps. Twenty-five.
• End of 2027 median: 3.10%. Another ~30 bps over the entire next year.
• Longer run: 3.13%. The Fed is telling you their idea of “normal” is right around here. There is no return to the 0–2% world.

The bottom line: if your deal underwrites at today’s rates, get it done. The Fed itself is projecting only ~35 bps of additional cuts between now and year-end, and longer-term rates (which is what 5-year fixed loans price off of) have actually risen 35 bps in just the last month on Hormuz-driven inflation fears. Waiting for a magical 5% conventional loan is a losing strategy.

My two cents: we are not going back to the post-COVID environment. The cheap-money cycle is over. The deals that pencil at today’s rates are the deals that should get done. Sponsors who keep waiting are giving up real economics. Both in opportunity cost and in the rising operating costs they’re absorbing while they wait. Today, with rising oil prices, the chances of another cut in Q3 and Q4 are minimal.

Did the SBA “Doubled” the SBA-Backed Loan Capacity to $10M?

What changed: On May 18, SBA issued Policy Notice 5000-879058, effectively doubling the cumulative SBA-backed financing a single borrower can carry from $5M to $10M (up to $5M of 7(a) + up to $5M of 504 debenture). Effective July 4, 2026. The previous cap was set in 2010 — adjusted for inflation that would be ~$7.5M today, so this is more than a catch-up.

It’s a reinterpretation, not a new law: SBA is clarifying that 7(a) and 504 are authorized under separate statutes, so balances in one don’t offset the other. The individual 7(a) cap is still $5M (separate pending legislation could raise that to $10M, but that’s a different bill). The 504 debenture sits in its own statutory bucket — that’s the legal mechanic that makes stacking work.

How it works in practice — two loans, specific sequencing: You must apply for and get approved on the 7(a) first, then the 504. Each requires separate underwriting, separate closings, and distinct use cases. Real-world hotel example: 7(a) for PIP soft costs, FF&E, and working capital → 504 for the real estate/structural piece. You can’t double-fund the same asset.

The qualification bar is high: To access the full $10M, expect to need a 700+ credit score, 2+ years in business, strong revenue, significant collateral, and proof you can service both loans without default. The borrower-plus-affiliates test still applies, so portfolio operators need to look at total SBA exposure across all entities.

Sequencing pairs with February’s citizenship rule: As we wrote in February, the March 1 SBA rule disqualified deals with any foreign national or green card holder in the ownership stack. Sponsors who cleared that bar now have meaningfully more SBA-backed capacity available — but those who got tripped up by the citizenship rule are still locked out of both programs.

Lender selection is the sleeper issue: Many SBA-active banks specialize in one program, not both. Stacking a 7(a) and 504 with mismatched lenders (or an overloaded CDC) can turn a 90-day close into a 6-month one. The borrowers who’ll actually benefit are the ones who line up a coordinated 7(a) + 504 + CDC team upfront… that’s where we can help.

Bottom line: A real win for sub-$15M hotel deals where the sponsor would otherwise be forced into conventional or private debt for the second half of the capital stack. Not a fit for everyone, but for the operators it does fit, this is the most meaningful SBA hotel-financing change in 15+ years. That said, two SBA approval processes isn’t for the faint of heart.

Featured Deal Close: Port Arthur, TX

We just closed a ground-up construction financing in Port Arthur, TX. This is exactly the kind of deal we love — strong sponsor, solid market fundamentals, and a use of proceeds (ground-up) where private debt continues to dominate.

We love that this is our first ground-up deal with our friends at Sonari Capital (and also in close partnership with Choice Hotels!)

PS: we love the blue hats and have plenty more coming to the office for the rest of our ground-breakings this summer. Yes, we did paste all those decals on by hand on the Sunday before!

Rates

Here’s where the U.S. rate complex sits as of May 27, 2026:

Source: Federal Reserve H.15, NY Fed SOFR; SOFR Swap rates reflect 1-month Term SOFR convention

About Bridge

We are the first fintech focused on Hospitality loans and partner with Hilton, Hyatt, AAHOA, Choice, Red Roof, Kalibri Labs, M3 and others.

We closed and funded $500.0 million+ in loans in 2025 (our first full year of Hotel Lending) and we only have one goal:

Simplifying access to competitive financing for your hotel loan.

Where Bridge Has Been and Where We’re Going

Want to meet us at NYU? Click this to block time

Past 3 Months

• Hunter Hotel Investment Conference — Atlanta, GA — March 2026
• AAHOACON — April 2026
• Wyndham New Owners Orientation
• Extended Stay Lodging Association
• G6 Annual Conference
• Hilton Key Event
• 2026 AAHOA CHLA Greater Los Angeles and South Pacific Hotel Owners Conference & Trade Show

Q2 – Q3 2026 (Where to Find Us)

• NABHOOD Conference
• LendingCon
• The Lodging Conference
• Red Roof Annual
• 2026 AAHOA Northeast Hotel Owners Conference and Trade Show
• 2026 AAHOA Central Midwest Hotel Owners Conference & Trade Show
• 2026 AAHOA South Carolina Hotel Owners Conference and Trade Show
• 2026 AAHOA Washington DC Hotel Owners Conference and Trade Show

Bridge Minibar Update

– Rohit