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Although hotels can make a lot of money, especially during peak season, owners also need lots of cash to get them up and running. Hotel loans can help business owners finance the construction of a new hotel and purchase or renovate an existing one.
To operate or run an existing hotel, a business owner may need a business loan for expenses such as buying land, purchasing an existing building, starting new construction, and making renovations. The options for lending may seem overwhelming, which is where this roundup comes in handy. Each company we reviewed caters to a particular need, helping make business lending less confusing and more accessible to current or prospective hotel owners.
There are several factors to consider when researching the best hotel business loan. Our experts used these factors to rank leaders and determine how hotel business loans stack up.
Loan Features: Loan features include what the loan terms are, including repayment optionality, and the amount of a loan that can be taken out
Application process - Another important factor to consider is how invasive the application process is, including whether there is a hard-pull or soft-pull credit score impact. How long it will take to receive the funding and any distinctively competitive offerings should also weigh in.
Interest rates and fees - When taking out debt, it’s important to consider what the hotel financing rates and fees are, as this will impact the total amount of money owed back.
Qualification process - In order to obtain a loan for hotel business, each company may have their own minimum credit score, annual revenue, and business history requirements.
Customer support - Customer support is important to consider, as you may want to talk to a live representative and will need to make sure the company includes it. Also important is whether they have online portal or chat functionality, as well as the availability of supplemental information and tools.
Online user reviews - Make sure the company you choose for hotel construction loans has positive user reviews. Independent review sites, such as Trustpilot, are a great resource to check out.
Perks and Bonuses - Don’t forget to consider specified service offerings like payment flexibility, transparency in fees, and advanced technology features that may be helpful when financing a hotel purchase.
Best Hotel Financing Companies for 2022 - Full Overview
1. Biz2Credit - Best for Commercial Real Estate loans
Biz2Credit offers commercial real estate secured loans to those looking to acquire new hotels or fund a hotel renovation. Hotel owners can qualify in as little as 48 hours, and have 12 to 36 months to pay back the loan. Interested borrowers can apply online or call Biz2Credit’s hotline at 800-200-5678.
To obtain a Biz2Credit commercial real estate loan, interested borrowers must have a credit score of at least 660 and have been in business for at least 18 months. They also need to have a minimum of $250,000 of revenue a year. Loan amounts start at $250,000 and go up to $6 million with rates starting at 10%. Repayment options include interest-only and monthly payments, giving the borrower flexibility and predictability during the debt payoff process.
The Bottom Line
Biz2Credit is our choice for commercial real estate loans thanks to their high loan amounts and dedicated specialists helping each step of the way. We also love the ability to use the loans for a variety of reasons, including renovating a hotel or purchasing a new one, as well as the monthly and interest only payment options.
2. Fora Financial - Best for Merchant Cash Advance
Fora Financial offers a merchant cash advance, which gives business owners a lump sum of cash and in exchange remit a percentage of the business’ credit card transactions. Therefore the remittance timeline matches up with the business' sales. This type of funding allows businesses the flexibility to use funds how they see fit.
Fora Financial may be a good fit for hotel owners looking for $5,000-$750,000 worth of funds. To qualify, business owners must have at least $60,000 of annual credit card sales and have been in business for at least 6 months. There are no set terms but they do offer early payoff discounts. Hotel owners can use funds for a variety of reasons such as renovating a hotel or upgrading technology systems or equipment. Applying for a merchant cash advance will not affect your credit score.
The Bottom Line
Fora Financial is our choice for merchant cash advance loans for hotel owners. With no restrictions on how funds can be used, as well as no collateral needed to obtain funds, the Fora Financial merchant cash advance can be a solid option for hotel business loans.
Credibly offers an equipment financing loan, perfect for hotel business owners. Applying for equipment financing only takes 10 minutes, and it’s possible to get approved in as little as four hours. Hotel owners can expect funds to be deposited into their bank account the same day. Equipment financing can also help hotel business owners increase their tax efficiency through a Section 179 tax deduction.
Credibly’s equipment loan is typically easier to obtain as the new machinery will be used as collateral. Their equipment loan does not require a minimum credit score or minimum annual revenue to qualify. On the downside, if you can no longer repay the loan that equipment will be collected. Borrowers can obtain $10,000 to $10,000,000 depending on the type of business with rates starting at 1.09%. The amount of time needed in business to qualify is not specified, so speaking with a loan specialist may be necessary.
The Bottom Line
With low interest rates and flexible terms Credibly equipment loan can be a good option for hotel business owners. The opportunity to receive funding with no credit score or minimum annual revenue required also helps Credibly stand out among its competitors.
Finding funds as a hotel startup can be difficult, and Torro understands that better than most. Without a business history, excellent credit history, or a large amount of assets, new hotel businesses are a risky investment. Unlike other lenders, Torro doesn’t require a business appraisal or an asset verification. With little to no paperwork needed to apply, Torro makes it easy for startup hotel businesses to obtain funding.
Torro offers hotel businesses two types of financing to meet their needs: fixed term funding and open ended funding. With fixed term funding the limit is $575,000 with payoff set from 3 months to 24 months. There is no penalty for paying debt off early. The open ended funding option gives more flexibility and has a $125,000 loan limit. As borrowers dip into the funds their payment is adjusted. The more funds they use, the higher their payment and vice versa.
The Bottom Line
Because Torro doesn’t require a business appraisal or asset verification they make an excellent choice for hotel startups. That combined with paperwork to apply makes Torro an easy choice for those looking to obtain funding for their new hotel business.