Hotel loans can be extremely useful when you’re looking to renovate, furnish, build, or purchase a hotel. Any of these actions generally involves a significant amount of funding, and in recent years more private lenders have become involved in financing money for hotel loans. That means if you’re looking for a hotel loan, it won’t necessarily have to come from a bank, because there are other options available to you.
Top 8 Types of Hotel Loans
For the year 2021, the top eight types of hotel loans are: invoice financing, owner financing, equipment financing, SBA 7(a) loan, SBA 504/CDC loan, hotel bridge loan, business line of credit, and commercial real estate loan. Any of these types of loans could work well for your enterprise, and may be able to provide you with the funding you need for the purposes you have in mind.
In an SBA 504/CDC loan, the SBA would guarantee somewhere between 50% and 85% of the loan, so that you have a better chance of being approved by a traditional lender. When you’re seeking hotel financing as opposed to general expenses, an SBA 7(a) loan might fit the bill better, and you could secure as much as $5 million through this type of loan. A business line of credit might be what you need if you’re looking to establish an ongoing source of capital which you can use in your hotel business.
A traditional commercial real estate loan could provide you with the funds you need for hotel construction, and would be available from several different sources. Equipment financing might be available to you if you’re looking to finance hotel construction, but you don’t have access to traditional construction loans.
Hotel bridge loans fill in the gap for financing which you need immediately, and these are intended to be short-term loans. Invoice financing will allow your business to obtain cash advances based on the value of some number of outstanding invoices you have. You might even be able to obtain owner financing, in which case you would purchase a hotel from the existing owner, and repayment terms would be worked out between the two parties.
A hotel loan can be a major transaction, and if you’re in need of funding to renovate your hotel or to establish better cash flow, we may be able to help. Contact us at Lighthouse Capital so we can explore some options about hotel loans.