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Hotel Financing: Best Business Loans to Consider in 2022

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.

Hotel Financing
Katie Oelker
Personal Finance Expert

Reviewed by: Jen Hubley Luckwaldt, Content Writer and Editor

Fact Checked by: Dr. JeFreda R. Brown, DBA, CFEI and a highly respected financial expert

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To operate or run a hotel business, the 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.

Our Top Picks for Best Hotel Financing

nationalfunding
  • Best Overall for Equipment Loans and Leasing
  • Fast funding
  • Early payment discounts
  • Best for bad credit loans
Min. Credit Score
Min. Credit Score 600+
Loan Amount
Loan Amount $250K-$500K
Loan Repayment
Loan Repayment 2-5 years
kabbage
  • No prepayment penalties and no origination fees
  • Easy application process
  • Monthly fee : 2-9% for 6 month loans, 7.5-18% for 12-month loans, 15.75-27% for 18-month loans
Min. Credit Score
Min. Credit Score 640
Loan Amount
Loan Amount $2K-$250K
Loan Repayment
Loan Repayment Up to 18 months
biz2credit review
  • Multiple loan types available
  • Funding in 48h
  • Soft credit pull
credit score
Min. Credit Score 600+
loan amount
Loan Amount $25K - $6M
loan repayment
Loan Repayment 12-36 months

How to Choose the Best Hotel Financing Option

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 terms, repayment options, and minimum amounts.
  • Application process: How invasive is the loan process? Consider whether there is a hard-pull or soft-pull credit score impact. How long it will take to receive the funding? Also, look for any distinctly competitive offerings.
  • Interest rates and fees: Rates and fees have an impact on the total amount of money your company will owe.
  • Qualification process: What do you need in order to qualify? Each lender has its own requirements for hotel business loans including minimum credit score, annual revenue, and business history.
  • Customer support: What kind of customer support does the lender offer? Consider whether you will have the option to speak with a live representative, access an online portal, or communicate via chat.
  • Online user reviews: Look at independent review sites such as TrustPilot and the Better Business Bureau to make sure that the company you consider for hotel construction loans has positive user reviews.
  • Perks and bonuses: Service offerings like payment flexibility, transparency in fees, and advanced technology features may be helpful when financing a hotel purchase.

 

Best Hotel Financing Options - Full Overview

National Funding - Best For Hotel Construction Loans

National Funding offers short-term working capital loans, which can come in handy if you need to fund a hotel construction or everyday expenses during slow seasons. You can borrow up to $500,000 but must commit to daily or weekly repayments.

Pros
Easy application: You may apply for a loan online, from the comfort of your own home or office, within minutes.
Early repayment discount: With a working capital loan, you’ll earn a discount on your remaining balance if you repay it in full within the first 100 days.
Positive reviews and high rankings: National Funding has a great reputation on reputable sites like Better Business Bureau (BBB) and TrustPilot.
Cons
Daily or weekly repayments: National Funding requires daily or weekly repayments on working capital loans, which can take a toll on your cash flow.
Origination fee: You’ll be on the hook for an origination fee.
Personal guarantee required: Even though you won’t need collateral for a working capital loan, you will need to personally guarantee it.

National Funding’s short-term working capital loans range from $5,000 to $500,000 with repayment terms between 4 months and 2 years. To take out a working capital loan, you’ll need a minimum credit score of 600, a business track record of at least 6 months, and $250,000 or more in annual revenue.

The Bottom Line

If your hotel earns sufficient revenue and needs some extra money to fund working capital expenses, National Funding should be on your radar. This is particularly true if you have steady cash flow and afford to pay off a loan early.

Kabbage - Best for Small Hotels with Fair Revenue

Kabbage Funding is our choice for smaller hotels that need a line of credit without going through a long application process. Kabbage requires only $3,000 monthly revenue to qualify, making their commercial line of credit accessible for small businesses. However, it’s important to keep in mind that monthly payment rates vary by loan size and term.  

Pros
Straightforward application process
Fair credit and revenue requirements
No prepayment or origination fees
Cons
Potentially high monthly rates
Low loan limit of $250,000
Not all term lengths available to all customers

Kabbage offers lines of credit for 6-, 12-, or 18-month terms. Loan amounts range from $2,000 to $250,000. Borrowers pay a monthly interest fee each month they have a balance on their line of credit. Fees vary according to term length. Note that the 6-month term is the most common term length and that not all customers qualify for longer terms.

Currently, Kabbage’s monthly fee structure is:

  • 2-9% for 6-month loans
  • 7.5-18% for 12-month loans
  • 15.75-27% for 18-month loans

The Bottom Line

Kabbage is a good choice for businesses that need a short-term cash infusion and will be able to pay off their debt quickly. Just keep in mind that longer loans come with higher interest rates. Not all customers will qualify for the lowest fees.

Biz2Credit - Best for Commercial Real Estate loans

banner_ Biz2Credit

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. You have 12 to 36 months to pay back the loan. Interested borrowers can apply online or call Biz2Credit’s hotline at 800-200-5678.

Pros
Quick approval and funding
Support from commercial loan specialist
Apply online or over the phone
High loan amounts
Cons
Must already own commercial property
Longer time in business needed
Higher annual revenue required
Potentially higher interest rates

To obtain a Biz2Credit commercial real estate loan, you 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.

Fora Financial - Best for Merchant Cash Advance

banner_Fora Financial

Fora Financial offers a merchant cash advance, which gives hotel business owners a lump sum of cash and in exchange remit a percentage of the business's credit card transactions. Therefore the remittance timeline matches up with the business' sales. This type of funding gives hotel businesses the flexibility to use funds how they see fit.

Pros
Application does not affect credit score
Early payoff discounts
Flexibility in how funds are used
No collateral needed
Cons
Smaller funds available
Must have been in business at least 6 months
Must have $5,000 in credit card sales each month
No set terms

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 $5,000 in credit card sales each month and have been in business for at least 6 months. There are no set terms but they do offer early payoff discounts. You can use funds for a variety of reasons such as renovating a hotel or upgrading technology systems or equipment for the restaurant in the hotel. 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.

Bluevine - Best for Business Lines of Credit

banner blu vine

BlueVine offers a business line of credit that you can use for hotel financing. A line of credit can help keep a hotel in business during a slow season. During extremely slow tourist or business travel months, such as during a pandemic, a line of credit from BlueVine can make it possible to afford expenses such as staff, inventory, and hotel maintenance until business picks up again. BlueVine also offers banking for businesses helping customers keep more of their finances in one place.

Pros
Can pay bills with credit card
Also offers business banking
Pay in fixed monthly or weekly payments
Low rates compared to competitors
Cons
Unavailable in Nevada, North and South Dakota
2.9% fee added if paying back by credit card
$15 per transaction if money is wired
Less time to pay back than others

In order to qualify for a BlueVine line of credit, business owners must have a credit score of at least 625 and be in business for at least 6 months. Their business must also have $10,000 minimum monthly revenue. Rates can be as low as 4.8% for up to $250,000 worth of funding. BlueVine allows borrowers to take out money through their line of credit and pay back each draw with fixed monthly or weekly payments over the course of 6 to 12 months.

 

The Bottom Line

BlueVine is a good choice for hotel businesses looking for a line of credit with lower rates than competitors with the ability to pay back up to 1 year. The lender also allows you to pay bills automatically with a credit card, which may help you earn rewards or cash-back benefits. This is a feature that is unique to BlueVine.

Try BlueVine

Credibly - Best for Hotel Equipment Financing

Banner Credibly

Credibly offers an equipment financing loan, perfect for hotel business owners. Applying for equipment financing only takes 10 minutes, and you can get approved in as little as four hours. Hotel owners can expect funds to be deposited into their bank account on the same day. Equipment financing can also help hotel business owners increase their tax efficiency through a Section 179 tax deduction.

Pros
No annual revenue required
Quick approval and funding
Potential tax deduction
No credit score required
Cons
Can only to be used for equipment financing
If repairs needed debt can increase
Equipment can be collected as collateral
Some information not available online

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.

Try Credibly

SmartBiz: Best SBA 7(a) Loan

Banner smartbiz

SBA loans from SmartBiz are a great option for hotel business owners that can qualify. SBA loans are small business loans that are guaranteed by the government and offers longer terms and lower interest rates than other small business loans. SmartBiz offers 2 different types of SBA loans, the SBA 7(a) loan and the SBA Commercial Real Estate (CRE) loans. And even if an SBA loan isn’t the right fit for your business, SmartBiz offers term loans and custom financing options, making financing easier to obtain.

Pros
Lower rates and longer terms
2 types of SBA loans available
Streamlined application and support team
Cons
CRE loan has to be 51% owner occupied
Application fee up to $3,000-$5,000
Guarantee fee from 2.77% to 3.75%

The SBA 7(a) loan can be granted in amounts from $30,000-$350,000 and can be used for debt refinancing and working capital. The SBA Commercial Real Estate loan ranges from $500,000 to $5 million and can be used to purchase or refinance commercial real estate. The interest rate for SBA 7(a) loans ranges from 8.25%-9.25% while the SBA Commercial Real Estate loan ranges from 7%-8.25%.

 

The Bottom Line

SmartBiz is our choice for SBA hotel loans for their streamlined application process and committed customer support personnel, helping make the arduous process of applying for an SBA loan easier. Terms for payoff range from 10 to 25 years, making SBA loans a great option for hotel business owners.

Try SmartBiz

GoKapital - Best for Hotel Bridge Loans

GoKapital

GoKapital is our choice for bridge hotel loans. A bridge loan is used for short-term financing when an investor needs cash to “bridge the gap” between transactions. This typically happens when the owner wants to purchase a property but doesn’t have enough funds to do so until they sell a different property. Thus, the bridge loan gives them the funding they need to get the new property in time and then sell the old property to pay it back.

Pros
Large loan amounts
Credit not only factor considered
Can purchase a new property before selling your current property
Cons
Higher rates than other types
Higher loan to value ratio required
Payments are interest only

GoKapital bridge loans can be obtained in amounts from $100,000 all the way up to $5 million. The rates are between 7-14%, which is higher than most traditional loans because of the higher risk. Because they are higher risk bridge loans from GoKapital require higher loan to value ratios of 50-70%. When applying, GoKapital checks credit, but it is not the only factor used when determining creditworthiness. Borrowers are given 6 to 24 months to pay back the loan.

 

The Bottom Line

GoKapital is our choice for bridge loans with their large amount of funding and competitive rates. With credit not being the most important factor as well, GoKapital makes it easier for hotel business owners to get the funding they need to expand their business.

Best Hotel Financing Companies - Main Features

CompanyMin. Credit ScoreMin. Time in BusinessMin. RevenueLoan AmountInterest Rate
Biz2Credit660+18 months$250,000+$250,000-$2 million10%+
Fora FinancialNot disclosed6 months$60,000 in credit card sales$5,000-$750,000Not disclosed
CrediblyNot required for equipment financingNot disclosedNot required for equipment financingFrom $10,000 to $10 millionStarting at 1.09%
Bluevine625+6+ months$120,000Up to $250,000As low as 4.8%
SmartBiz650+ 2+ yearsNot disclosedUp to $350,0008.25-9.25% depending on type
GoKapitalNot disclosedNot disclosedNot disclosed$100,000 to $5 million7-14%
Kabbage640+12+ months$3,000 (monthly)$2,000 - $250,0006-month loan: 2-9%,12-month loan: 7.5-18%,18-month loan: 15.75-27%
National Funding600+6+ months$250,000Up to $500,000Not disclosed

 

How Much Does It Cost to Open a Hotel?

All values are based on average market prices. According to Hotel Tech Report, the percentages you see in the brackets show the ratio of a particular line in the project's total cost.

  • Hard costs and site improvements $255,400 (76%): This category includes everything from land costs to permits, building, engineering, and landscaping. Other expenses include plumbing, finishes, parking, and site improvements.
  • Soft costs $41,800 (12%): These are the skill-based fees you offer to the professionals like architects, designers, lawyers, and accountants. This category also carries the franchise application costs, land closing fees, taxes, and insurance.
  • Furniture, fixtures, and equipment $29,100 (9%): This line includes the calculations for all types of furniture and fixtures, kitchen equipment, washers and dryers, technology in the meeting rooms, room cards, and other appliances.
  • Pre-opening and working capital $10,700 (3%): Last but not least, you need to collect staff and make some effort to train them in advance. This line is all the funds needed for operating reserves, technical services, recruiting, and purchases.

As you can see, opening a hotel requires a large amount of initial capital. You should also consider amortization over the years, ongoing staff training, and many other current and future expenses, which will help you keep the accommodations up-to-date and avoid larger spending later down the line.

 

What Can You Use Hotel Loans for?

  • Purchasing an existing hotel: Financing a hotel purchase allows interested investors to buy existing hotels that may be for sale. Without funding, many owners simply would not have the funds to purchase a property outright.
  • Remodeling or renovations: Hotel loans give business owners the funds to remodel or renovate an existing hotel.
  • Purchasing land for new build: Some hotel business loans will give the option to purchase land for owners to build a brand new hotel on. Land is expensive and so funding makes it possible to obtain it when needed.
  • Constructing a new hotel: Hotel construction loans allow investors to construct a new hotel either by demolishing a former commercial building or building a brand new hotel on purchased land.
  • Buying new technology for hotel: Old hotels may have systems that need to be upgraded, including security and reservation management. Hotel financing makes these updates possible.
  • Hotel maintenance: Obtaining a loan for a hotel business can give borrowers adequate funds to maintain a hotel, covering expensive repairs that owners can’t afford otherwise.

 

How Does a Hotel Loan Work?

In the United States, the steps you need to take to apply for a hotel loan are simple.

  • Complete an application form and wait for approval.
  • Once the lender has approved your application, the loan money will be transferred to your business account.
  • You can then use the loan money for different purposes–from establishing to improving your hotel business.
  • Once your hotel business begins to gain momentum, you can start making repayments to the company. However, the loan amounts, rates, and requirements can change depending on the lender.

 

Common Hotel Loan Amounts

The amount of money you can borrow for a hotel loan varies from lender to lender. In the majority of cases, the lender will make decisions according to your current cash flow, the size of your hotel, the purpose of the loan, the number of years your hotel has been in operation, and more. Small hotels may be loaned $100,000 to $1 million, while more established hotel businesses may get financing as large as $50 million.

 

Hotel Financing Rates

Like the loanable amount, financing rates will vary according to your application and the lender. Expect interest rates to be around 6.5% to 12%. If you wish to apply for a hotel loan from a bank, the financing rate they offer could be lower. However, there may be harsher lending criteria. If you need a quicker and easier approval, you may wish to borrow from private lenders. If you do so, you will likely be required to pay higher interest rates.

 

How to Qualify for Hotel Financing?

When looking at financing a hotel purchase there are several companies to choose from. Each company has unique lending options, suited for everyone from existing owners to startups. While lenders have their own unique qualifications they consider, most will include the following factors:

  • Credit score of business: Is your credit score high enough to qualify?
  • Time in business: Have you been in business long enough to qualify?
  • Annual revenue: Do you have the minimum amount of annual revenue to qualify?

Once you’ve determined you’re eligible enough to potentially qualify, most applications can be completed online or over the phone. If applying online, a customer representative may contact the interested applicant to go through the application and determine the next steps. Typically further documentation will be required. After the applicant is approved, funding will enter the borrowers’ bank account within a few days to a few weeks or longer.

 

Other Types of Hotel Financing

The hotel business is changing. Not every hotel business owner operates a traditional hotel or franchise. To find a loan that fits your unique situation, consider these options:

Bed and Breakfast Business Loans

Bed and breakfast loans include working capital loans, business lines of credit, and short-term loans. Consider options that fit your credit and business history. Pay attention to fee structures–some loans have origination and borrowing fees that will add to your debt.

Airbnb Loans

Depending on your needs, you might choose to finance an Airbnb or VRBO business with working capital, term, or business loans. You might also look at lines of credit for short-term expenses. Keep in mind that loan amounts and terms vary widely.

 

Conclusion

Hotel owners, either current or hopeful, need hotel loans to run their business. Whether it's purchasing land, renovating an existing hotel, constructing a new hotel, paying for maintenance, or upgrading systems, hotel ownership costs a lot of money. Luckily, some lenders are willing to help. While the process to apply can be daunting, the lenders we reviewed make it a top priority to help their customers obtain good hotel financing rates and terms. Do your homework to decide which lender fits the needs of your business best.

Katie Oelker

Written by: Katie Oelker

Personal Finance Expert

Expertise in financial topics including budgeting, saving, simplifying investing, life and disability insurance, credit building and maintenance, and credit card travel rewards.

More about me
Jen Hubley Luckwaldt

Reviewed by: Jen Hubley Luckwaldt

Content Writer and Editor

Jen Hubley Luckwaldt is an editor, writer, and content strategist with a focus on personal finance, careers, and DEI. A small business owner for over a decade, Jen helps publications and brands create and optimize B2B and B2C content.

More about me
Dr. JeFreda R. Brown

Fact checked by: Dr. JeFreda R. Brown

DBA, CFEI and a highly respected expert in personal and business finance

Dr. JeFreda R. Brown is more than a financial consultant: she’s an avid teacher and subject matter expert who helps people—individuals and groups in a business setting—master the skills they need to achieve lasting financial wellbeing. As Founder and CEO of Xaris Financial Enterprises, it is her passion and life goal to help others develop and maintain financial wellness.

More about me

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