Hospitality Business Loans Explained
As we can see in the table above, each loan type caters to a specific need. Let's go through all five loan types in more detail.
1. Hospitality Term Loan
With this loan type, you can do just about anything: renovate, expand, use it as working capital, refinance other debt, and much more. These are some of the most straightforward options given out by banks and financial organizations. Hospitality term loans are affordable and provide the most extended payback periods.
Term loans can help you acquire new business assets or refurbish and improve the ones you have. They are versatile and can help any commercial use case, including other loan repayments, working capital, and staff training expenses.
Kabbage is among the best in invoice factoring, and it's also excellent for small business term loans. It's easy to qualify for a contract with this credit organization. Kabbage has limited repayment terms, however, this means faster loan turnovers.
2. Hospitality Line of Credit
A line of credit applies to any spending you can think of. Although it's as versatile as the aforementioned commercial term loan, you don’t need preapproval or due diligence. You can just enter your account and use the funds.
It's neither as large as the term loans, and the repayment period is not as long. But this loan type can help you out if your business meets unforeseen situations and needs emergency funds.
Applying to Fundbox is as easy as registering on their site and connecting your accounting program. Once you're done, an estimated line of credit will display, and if you like the terms you can access the funds with no collateral.
3. Hospitality SBA Loan
Small Business Administration loans, or SBA, are government-supported risk reduction programs covering startups of any kind. While the SBA is the program initiator, the organization doesn't pay the funds but guarantees risk mitigation for the lender.
These loans can cover real estate purchases, renovations, and building construction expenses. Many businesses in the hospitality sector need such investment to boost their initial capital or expand their business.
SmartBiz is an online marketplace for the best SBA loans. Depending on lender requirements, this platform can match you with the best lenders, which is quicker than approaching banks manually.
4. Invoice Financing/Factoring
Invoice financing is a quick invoice-based loan that can cover spendings until the business gets the full payment. It usually acts as a working capital emergency loan that is repaid in a short period of time.
If your hospitality industry establishment gets a large booking that needs extensive preparation and many expenses, this type of credit can help you cover your expenses.
BlueVine is an excellent option for hospitality industry businesses who wish to get cash advances. BlueVine is generally quick to approve loans and offers affordable rates, plus you will likely receive excellent customer care.
5. Equipment Loans
Equipment loans are straightforward. You have two types of loans in this category: one allows you to buy the equipment with a down payment, while the other is designed to provide you with money to lease equipment. Most of the time, these loans require collateral, which, according to most contracts, is the machine or equipment itself.
Whether you need to buy stoves and ovens for your restaurant, purchase laundry machines for your B&B, or acquire a new ride for your theme park, this loan is perfect for you.
LendingClub is most notable for its agriculture loans. However, it can provide many other funding types depending on your needs, business size, and the goal you want to accomplish. Equipment loans are one of them.