Opening a hotel can be exciting. However, before you start, you need to figure out how you will afford it. Several loans are available that can help you fund your new business, and different loan types can help you each step of the way. Here are some various ways you can finance your hotel.
If you want to renovate an existing hotel, there are a few hotel financing options. You will generally get a smaller amount of money since renovation projects do not cost as much as building a new structure. You can try a conventional bank loan, a business line of credit, or a bridge loan. These choices all come with varying application processes, so research to see the requirements of each one.
There are a few funding options available if you need to refinance your hotel loan. You may need to refinance because you received less money than your desired amount. A conventional bank, SBA 7(a), and SBA 504 loans can help refinance your hotel investment.
New Construction Loans
If you are building a new structure, several choices for hotel financing are available. You will require at least $1 million since building from the ground up can be expensive. There are many fees, taxes, and licenses attached to building a new structure. Keep this in mind as you go forward.
Generally, an SBA loan will not be feasible since qualifying will be challenging. However, there are other choices for new building projects. A traditional bank loan, private lender, or real estate investment company are all ways that you can get the necessary funding for your project.
If you are interested in franchising a hotel, you may find that getting funding is simpler. Since you are buying a hotel that belongs to a franchise, there is already a proven record of success. A successful hotel chain shows banks that loaning you money is not risky. A conventional bank loan, SBA 7(a) loan for commercial real estate or an SBA 504 loan are all viable options. Depending on your needs and financial history, these programs could help with your hotel acquisition.
Deciding to renovate, buy, or franchise a hotel is a big decision. If you are having difficulty deciding how to afford your new venture, these funding choices could help. With proper research, documentation, and consultation, it is possible to get enough money to cover any expenses you have.