Are you planning to invest in the hotel industry or want to renovate your hotel? Is your financial state not allowing you to do so? Then, you may get a hotel loan from Commercial Real Estate Loan Pros of Gainesville with favorable conditions.
What is a hotel loan?
A hotel loan is a loan category designed to help businesses belonging to the hospitality industry. This loan can vary in size and structure depending on the size of the business.
Types of hotel financing
Permanent loans – This loan is designed for borrowers who intend to build a hotel, so it acts as money for construction, but then it will convert to a mortgage once the project is done. Thus, the borrower gets all the finances from one place.
Mezzanine financing – This loan combines debt and equity. The hotel gets both the money and the loan interest for the exchange of hotel shares. It is easy to apply but comes with high interest rates.
Preferred equity – This loan gives credit to the business in exchange for hotel shares. The main aim of this loan is to boost the business cash flow.
Hotel bridging loans – This loan helps fill in missing funds between having a mortgage and getting a new building.
SBA hotel financing – The government backs this loan for small enterprises. Interest rates are kept low for this type of loan, but it is challenging to get it if your credit score is not good.
Standard hotel loan – Also known as a traditional loan. It comes with a loan term and a fixed interest rate. This loan is mainly paid monthly or according to the agreement of the lender and the borrower. The payment covers both the principal and accumulated interest of the loan.
Purpose of a hotel loan.
A hotel loan is mainly used to aid owners of a hotel grow their business. Some of the reasons you need to get this loan could be you need to renovate the hotel, hire new staff, boost the hotel’s cash flow, or buy new equipment. This loan can facilitate all this if your hotel has a high credit score and good financial documents to secure a reasonable loan amount.
How does a hotel loan work?
Loanable amount –
This amount varies from one lender to another. Factors determining the amount your hotel will receive mostly are dependent on the current cash flow, size of the hotel, years of operation, and purpose of the loan. Large hotels may receive up to fifty million in funding, while small hotels may receive up to a million.
Financing rates – This will also depend on your lender, but it should range between 6% to 12% in interest rates. High rates will mostly be from private investors where the approval process will be easy, but lower interest rates will be from banks where the approval process might take some time due to a strict lending formula.
Do you have any questions regarding hotel loans? Please take your time and contact Commercial Real Estate Loan Pros of Gainesville to be assisted on which loan would best suit your hotel and why.
There are so many areas or regions where we offer these services with most of them being cities.
However, if you need any of these services, you need to contact us. The list below comprises the areas where we offer these services.