Financing for Franchise Hotel

Over 80% of hotels in the US are franchised, and maybe you’re ready to join the trend. However, before you open your doors and welcome guests, you’ll need to secure the right financing for your hotel.

The good news is that there are plenty of options available for you, from traditional bank loans, to SBA loans, to private equity also bridge financing.  As long as you choose the right type of loan, you’ll be on your way to becoming a successful hotelier without worrying about your financial future. Here’s a quick overview of the different hotel loans.

SBA Financing for Hotels

SBA hotel loans offer millions in funding for both franchised and independent hotels, including ground up construction, refinancing and the acquisition of existing hotels.  A significant benefit of this financing option is that it offers lower interest rates than most banks. You can also choose a longer loan term than what you might get at a traditional bank.

What this all adds up to is more money in your pocket when you close on your new hotel.

Bridge Loans

A bridge loan is a short-term loan that’s used to bridge the gap between a property closing and permanent financing. Bridge loans are often used to close a deal quickly, as they allow you to buy the property and get started collecting revenue right away. A typical term for this type of financing is 6 months, but some lenders will extend it for up to 2 years if needed.

Conventional Hotel Loans

Conventional loans are the most common type of hotel loan, and they can be obtained from banks or other financial institutions. Most conventional loans require a good credit score (at least 700) for applicants to qualify. The lender will also impose additional requirements, such as more money for the down payment.

Even though conventional loans are a little stricter than they used to be, they’re still a solid choice for financing hotels.

Loan terms range from 5 to 10 years, with amortization lasting up to 25 years. Interest rates are also favorable. Conventional loans usually carry lower rates than bridge loans and SBA 7(a) loans.

Private Capital

You can also work with private investors to fund your hotel. However, this type of financing carries more risk than conventional loans or SBA loans. You’ll need to find an investor willing to take on that risk, and you might have to pay a higher interest rate in exchange for that capital.

Finance Your Franchise With the Right Help

We hope this article has helped you understand some of the different types of hotel loans available. It’s best to know what kind of financing you need before choosing a lender.

If you are currently looking for a loan, we would love to help! We know what it takes to get a franchised hotel, so we offer flexible terms that can meet your needs.

Our goal is to work with you in finding a solution that fits your business plan while keeping your costs low! Please Contact us today so we can find out more about your business.

Leave a Comment

Your email address will not be published. Required fields are marked *

Scroll to Top