We’re Here to Answer All
Your Questions About
Hotel Financing.
Below are answers to some of the most common questions we’re asked about hospitality finance. Have more questions?
Please call us now at 866-994-6835.
EXPERT ANSWERS
Click on a question below to get answers to our most common questions.
How Long Does it Take to Close a Hotel Loan?
This question is often asked because it’s important to all parties (the seller, the buyer and other parties involved in the transaction) and everyone wants to close as quickly and as efficiently as possible.
The short answer is it varies. For example, bridge financing can close quickly when a borrower is up against a contract deadline and their existing lender cannot perform — in the right circumstances, fast enough to protect earnest money.
There are several things that can determine how long it will take to close a hotel loan. These include the following:
- The type of loan being used. Some loans close faster than others. For example, a bridge loan can close in just a few days. CMBS and Conventional loans can close as fast as 4-6 weeks. SBA lenders have significantly reduced the number of days it takes to close. Years ago it took months. However, Preferred SBA Lenders (PLP Lenders) can typically close within 4-6 weeks of the issuance of a term sheet.
- How long it takes to get the appraisal and other third-party reports completed. This can vary by location. For example, in some areas an appraisal can obtained within a week or two. In other areas in may take longer.
- How quickly the seller and the borrower provide the information needed to the lender who is providing financing. Closings are often delayed simply because the lender cannot get the necessary information from the seller and buyer to move the loan forward in a timely manner. Also, it’s important that the information provided is thorough and complete or the closing could be delayed.
- The experience of the lender. Hotel transactions are different than other types of real estate loans so it’s important to use a lender that has a deep understanding of hotel financing. Closings often take much longer than necessary when the lender that is chosen doesn’t have the hotel lending experience needed to close the loan quickly and efficiently.
In summary, there are several factors that determine how long it takes to close a hotel transaction. With that in mind it’s important to go with the right loan type for the project and the right lender who has the hotel lending experience needed to close the loan as efficiently as possible. Finally, it’s important that both buyers and sellers provide the lender with the information they need to move the loan forward with no delays.
How Much Money Do I Need to Put down to Buy a Hotel?
One of the first things we do at HotelLoans.com when we talk to a borrower who is looking for financing to buy a hotel is determine what the most important thing is they want to accomplish (besides buying the hotel of course).
- Do they want the lowest interest rate possible?
- Do they want a non-recourse loan?
- Do they want the lowest prepayment penalty possible?
These are all important, but if putting down the least amount of money possible is the goal, there are several ways this can be accomplished:
Benefits of an SBA loan for the purchase or refinance of a hotel property:
- Obtain an SBA 7A, SBA 504 or USDA loan to buy the property. Government-backed loans like these can reach up to 85% of total project cost — which includes the acquisition price, PIP, closing costs, and guarantee fees — with the borrower contributing roughly 15% equity, where the property’s cash flow supports the debt. In the past, SBA or USDA loans had a reputation for tons of paperwork and taking months to close, but this is no longer the case. In fact, HotelLoans.com will take care of the paperwork for you — we assemble the complete loan package so the lender is not waiting on documents.
- Offer additional collateral for the loan. If the borrower has equity in another hotel, other commercial real estate or even their primary residence, this can often be used as additional collateral to get a higher loan amount resulting in less money down.
- Ask the seller to finance part of the purchase price. If the seller of the hotel is willing to finance part of the purchase price that can further reduce the amount of capital required from the borrower.
- Pledge cash flow from another hotel or business. If the borrower owns another hotel or business, cash flow from that business can be pledged to get the lender more comfortable with the transaction and get a higher loan amount. No real estate is pledged, just cash flow from the hotel or business.
- Bring in an equity partner. If you have identified a property with a lot of upside potential but don’t have the capital to put down, utilizing an experienced equity partner can mean the difference between securing the property or missing out on the opportunity.
I Don’t Want an SBA Loan, What Other Options Do I Have?
While SBA loans are an excellent way to finance a hotel, at Hotelloans.com we have many ways to finance the acquisition, repositioning or construction of a hotel property. These include Conventional Loans, CMBS Loans, REIT’s, Mezzanine Financing, Private Capital and other funds.
There are a number of factors that determine which loan type is right for your transaction. For instance, where is the property located? What is the purchase price? What is the borrower’s experience level? How has the property been performing? Is the property a turnaround property or is it stabilized? Are renovations required after the property is purchased? The answers to these questions and others determine what loan type is best for what you want to accomplish.
Should I Get a Non-Recourse Loan?
A non-recourse loan is a type of loan secured by real estate, in this case, a hotel. If the borrower defaults, the lender can seize the property but cannot seek out the borrower for any further compensation, even if the collateral does not cover the full value of the defaulted loan amount.
Every type of loan available for commercial real estate is different, but some loan details may be more important than having a non-recourse loan. A non-recourse loan like a CMBS loan is typically priced below shorter-term, transitional debt, however, the prepayment penalty is very aggressive. If the borrower’s intent is to refinance or sell the property within a few years, the high prepayment penalty may make the non-recourse loan less attractive. In addition, a non-recourse loan is generally written at lower leverage than a recourse loan.
A non-recourse loan is a great option because the borrower’s assets are protected, and pricing is generally more favorable than on short-term transitional debt. When pursuing financing for a hotel it’s important for borrowers to know what their business goals are. If a low down payment or a small prepayment penalty is more important than having a non-recourse loan, then the borrower may want to consider some other type of financing.
Speak with a hotel financing expert
Call 866-994-6835 or complete the form and a hotel financing expert will get back to you. There is no obligation, we never charge an upfront fee, and you do not need to have everything organized before you reach out — we are glad to answer questions even if you are not ready to move forward.
Last reviewed: August 2026