Published On: Thu, Jul 11th, 2019

5 Best Business Loans for Your Hotel

Hotel/motel business owners know the struggle of finding the right business loan. Traditional lenders are skeptical when it comes to providing hotel financing for hotels because of the risky nature of the business. This is because the success of hotels is mostly dependent on outside factors, such as the weather. 

However, just like other businesses, hotel financing is needed to pay for renovations, improvements, upgrades, as well as paying for operational costs. As a hotel business owner, you need to find the right hotel loan to secure your business’ future. 

pixabay/Mashiro Momo

Here are five of the best loans for your hotel/motel business:

SBA CDC/504 Loans

SBA CDC/504 loans are perfect for hotel owners looking to finance hotel construction, equipment purchases, as well as commercial real estate. Unlike other types of loans, you can only use a CDC/504 loan for the following purposes:

  • Renovations
  • Purchasing land and property
  • Purchasing existing buildings
  • Land improvements
  • Long-term machinery and equipment

Since SBA loans are backed by the Small Business Administration (SBA), the CDC/504 loan offers one of the best hotel construction loan terms available today. This loan has repayment terms that can extend from 10, 20, to 25 years, and loan amounts up to $20 million.  

SBA 7(a) Loans

To fund general hotel expenses like daily business operations, payroll, and more, an SBA 7(a) loan is the better option. Among the other types of SBA loans, the 7(a) loans are the most popular because business owners can use them for a wide variety of business expenses. 

As mentioned, you can use them for operational expenses, commercial real estate, construction, and more. Just like the CDC/504 loans, 7(a) loans have longer repayment terms and affordable interest rates. Repayment terms can be up to seven years for working capital loans, 10 years for equipment and machinery, and 25 years for real estate. 

Asset-Based Loans

If your company doesn’t have enough revenue and cash flow to qualify for a traditional loan, you can leverage company assets that have decent equity. You can use business assets as collateral to secure an asset-based loan or an asset-based line of credit. Other types of collateral accepted for asset-based loans include the following:

  • Accounts Receivable
  • Inventory
  • Purchase Orders
  • Machinery and Equipment
  • Commercial Real Estate
  • Marketable Securities
    • Intellectual PropertyBusiness Line of Credit

If flexibility is your top priority when looking for a business loan, you might want to look into a business line of credit. This type of loan works just like a credit card. The revolving lines of credit enable you to withdraw funds from whenever needed. You don’t have to repay the entire credit limit; you only have to pay for the amount of money you’ve withdrawn, plus interest. Once you’ve repaid the loan, credit limit goes back to its original amount. 

Invoice Financing

Invoice financing is a great option if you need fast cash and you have pending invoices. With invoice financing, business owners sell outstanding invoices to a third party company at a discount. The funds you receive from invoice financing is secured by the invoices sold.

Apply for Hotel Financing Today!

Hotel financing loans can tremendously help in funding hotel upgrades and improvements. With a new and improved hotel, you can attract new customers and survive seasonal slumps without a problem. The right type of hotel business loan is the key to your business’ success. SMB Compass’ trusted financial advisors will help you find the right loan for your working capital needs. Call us today at (888) 853-8922 or email us at [email protected]. We’d love to hear from you!

Author: Matt

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