The hospitality industry is unique, and that means your business will have unique financing needs. Luckily, there are a few places where you can find loans and other credit instruments that are built around your unique business model and annual cycle. Hotel financing programs cover everything from acquiring and renovating existing hotels to financing your operations budget and building new locations.
SBA Loans for Renovation and Acquisition
The SBA has a loan program dedicated to connecting small businesses with properties that can serve as a base of operations in lieu of having to lease space. The 7a program specifically outlines its provisions for hotel businesses, anticipating the need for hotel owners and entrepreneurs to make a first-time investment to fund an acquisition. Owners of existing businesses can also refinance a property to fund renovations using this program, provided the equity is available in the property. That lets you launch or re-launch your business with an affordable loan option.
Credit Lines for Hotels
If you need a reusable source of short-term financing, there are also credit lines built around the industry. They allow you to use the equity in your hotel to control the cost of borrowing, so you can then manage cash flow or fund projects with ready working capital. With the right credit line, you can self-manage your most basic hotel financing needs without constantly applying for short-term loans.
Operational Loans Based on Your Assets
You can use a real estate bridge loan to get a large sum of capital for extended budgeting and operational planning, but you might have other options as well. Real estate loans with terms of up to three years give you the chance to plan out your annual goals and commit money to expansion projects and marketing campaigns without worrying about when your income will actually flow or whether you have to cut corners during a slow season. Your busy seasons allow you to pay extra into the loan to get the principal handled, but your slow periods are unhampered by overhead when your minimum payment is just the interest accrued.
Find a Hotel Financing Program Today
The next step is finding the right lender for your business. Programs are often built around specific industry niches, so a small bed and breakfast operation might have a different ideal lender from a 50-room motel or a larger hotel. Take your time to shop for a lender who caters to your business if you want to make the smart choice about a cost-efficient financing package.