Hotel Financing Loans Explained
In this section, our experts take an in-depth look at the loan types and recommended loan lenders featured in the table above.
This loan type is the industry-specific equivalent of a business acquisition loan. It covers everything from hotel improvements and renovations to equipment financing and hiring new staff members. Its structure and payment frequency are very similar to that of traditional loans.
If you're looking for a government-backed loan, SBA 7(a) is the way to go. Standard credits are the most basic loan types. They are beneficial for several reasons, including the amount you are able to get and the length of time of the loan. These loans also give you the option of financing them on a monthly basis.
For entrepreneurs entering the hotel market for the first time, Fundera is our recommended standard hotel loan choice. Fundera doesn’t require too much documentation so it is easy to apply for funds. They will also get back to you with an answer promptly.
You will likely want to look into this type of credit if you are expanding and investing in your property. This loan type lets you acquire another property, while your main property continues bringing in money. While it's a short-term agreement, it's also easy to qualify for. Hotel bridging loans can, however, be risky, as in some cases your primary asset may not perform well.
Square Capital is an excellent option for short-term, fast funding. It has been around since 2014 and has a proven partnership with Celtic Bank. It requires the merchant to use its Square point of Sale (POS) to qualify for its loans.
Permanent loans are intended for entrepreneurs who want to build their hotels from scratch. You can apply to get funds for construction, and the loan can be transformed into a mortgage once you open your hotel facilities. Instead of using two loan types for construction and operations, you save time and effort by consolidating the two into one.
National Funding is a trustworthy credit company with more than 20 years of business experience. It's considered to be the best option in terms of equipment financing. However, due to its long years of operation and personalized partnership approach, it's suitable for a long-time commitment.
SBA is a government-backed loan type that's a bit harder to qualify for. You have to meet credit score standards, owner-occupancy requirements, promote public policy, and have operating profit.
You can use SBA loans for the following:
- Building purchase
- Construction and renovation
- Land improvements
- Equipment purchases
- Similar debt refinancing
These loans feature fixed rates, higher loan amounts, and lower interest rates.
As a qualified lender, SmartBiz provides a marketplace for SBA loan lenders. Smartbiz has the best credits available. The platform also reviews each credit type. To qualify, you should have a personal credit score of 650 and a business credit score of 150 and above.
With invoice financing, the credit organization or banks provide you with a loan against a future invoice. This type of financing is suitable for those businesses that don't have enough liquid capital. You need a credit score of at least 600 to qualify for this loan type.
Our recommended lender for this loan type is BlueVine. With affordable rates, quick arrangements, and excellent customer service, this credit organization is a great choice for small hotel businesses with big ambitions.
A merchant cash advance loan is not a loan in the traditional sense of the word. It's simply a cash advance that is based on a company’s future credit and debit card sales.
The lender looks at daily receipts and determines how much the company will be able to repay, plus interest. To qualify, the hotel needs to be operating for at least six months before applying.
Fora Financial offers hotels in need merchant cash advances with no restrictions on use. They also award business owners who can pay off their cash advance faster with early payoff discounts.
No collateral is required to qualify for a merchant cash advance, and there are no set terms for repayment. Hotels can apply for a cash advance between $5,000 and $500,000, depending on how much they earn.