It’s a common refrain from hotel guests: the rooms or decor are outdated. If you own a hotel, it’s not something you want to hear, especially since it can be an omen of an expensive renovation in your near future. The demands of a renovation can vary — perhaps you just need to replace the carpet in your common areas, which is a relatively easy update to finance. However, if it’s time to update all of your guest rooms then it’s a more intimidating prospect and one that can easily require more funds than you have in your reserves. When that time comes, consider hotel financing as a way to give your property the update it needs without breaking the bank.
What Are Your Options?
One of the fantastic things about hotel financing is that you have a choice of sources. When it comes to renovations and updates specifically, there are two primary options you can seek out.
- SBA 504 Loans: These loans are sponsored by the U.S. Small Business Association, but are funded by you, in the form of a 10% down payment, the bank, who provides 50% of the total, and a Certified Development Corporation (CDC), which provides the remaining 40%. These loans are different from most SBA loans, as they are specifically for obtaining and renovating fixed assets, like property. You get up to 20 years to repay the loan, with a relatively low interest rate, depending on your bank and CDC.
- Standard Bank Loans: You’re probably pretty familiar with this type of standard loan. With it, your financial history will come into play and the loan terms will be worked out between you and the bank. This probably has a less demanding application process than the SBA 504 loan, but your terms may not be as favorable.
What Do You Need to Know?
You’ve come to the point where you can’t ignore it any longer and are ready to seek out that financing to make your updates. To get that loan approved, you need to have a strong business, one that shows a lender that you’ll be able to make your payments and that your property is popular enough to merit the updates. Do your research in deciding which loan to seek, and make sure you have a plan in place for the updates and how they’ll help your business. Don’t let the demands of keeping modern get you down, hotel financing can help you invest in your property and your future.
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