If you have ever dreamed of owning a hotel, chances are you will need a loan to get your business up and off the ground. Hotel loans are perfect for this as they can help you with whatever needs you might have when you get started in the hospitality industry.
What are Hotel Loans?
Hotel loans are loans that are specifically designed to help you with the expenses of opening your hotel. They are designed to help the hospitality industry when you wish to open a smaller hotel and not a giant chain hotel like a Motel 6 or a Hampton Inn location. These loans help smaller hotels find their footing and get their start in the industry. Common Types of Hotel Financing:
There are several common types of hotel financing available to new investors. It may seem overwhelming to choose the right financing for your new startup, but that’s why we are here to help. The following are some of the most popular ways that you can finance your hotel startup:
Standard Hotel Loan: A standard hotel loan will provide you with a fixed loan term and interest rate. These loans are the most common types of loans for a hotel to use. They are used to cover things like hotel remodels, hiring more staff, or purchasing new equipment for your establishment.
Mezzanine Financing: This financing will help you handle both debt and equity in your business to get a loan to help you improve or expand your hotel business. Financers will give you the money you can pay back with a monthly payment and they can buy shares in your business to help give you more capital to spend. This type of financing lets you use the equity in your business to grow and improve it further.
Hotel Bridging Loans: You can use these loans to bridge that gap between acquiring assets for your hotel and finding more permanent financing solutions.
Permanent Loans: You start using this type of financing to build your home from the ground and move up from there. You don’t have to qualify for many separate loans this way. You will have to give priority to preferred shareholders over the other shareholders in your business if the hotel should ever go bankrupt.
SBA Hotel Loans: SBA Hotel Loans allow you to get government-backed loans for smaller hotels which guarantees that a large percentage of the loan for the lender if the owner is unable to make payment. You are decreasing your risks with these types of loans and interest rates are lower and much more affordable.
These are a few of the most common types of financing for a hotel start-up to qualify for and use to get their business off the ground and growing. What Can I Use My Loan Money For?
If you are starting your own hotel business, there are a lot of things that you can use this loan money for. You will typically need a higher business credit score to get government-backed loans, but other options are available to those businesses that have lower credit. It’s up to you to find the option that works best for your business.
The following are some of the things that you can use your loan on to help improve your small business:
Purchasing real estate for your hotel
Refinancing your hotel
Refinancing to get more cash from your property
Remodeling/relocating your business
Providing more hospitality services
Financing new or additional equipment
Paying for day-to-day operational expenses
Hiring additional workforce
If your business requires additional financing for any of these aforementioned issues, please feel free to contact us for more information! We are here to help and it’s a pleasure to assist you in helping your hotel business grow/expand!