Hotel and Motel Loans & Financing

What are Hotel or Motel Business Loans?

Hotel or motel business loans are industry-specific loans offered by traditional and non-traditional lenders to support a range of business needs. Like any business within the hospitality industry, hotel owners utilize these loans to order necessary equipment and supplies, renovate their site location, hire staff, and refurbish rooms if needed. Small and growing hotels in need of expansion know the best solution is acquiring the required working capital to enhance their business.

First Union is here to help! There are a variety of loan options that can help your hotel or motel thrive.

Types of Hotel and Motel Business Loans and Financing Options

Once you've confirmed the need for funds, consider the factors that are most important to you. Business owners should look for loans that offer great interest rates, down payments, and collateral requirements. Here are the more widely used loans to help hotels and motels.

• SBA Loans: Partly guaranteed by the U.S. Small Business Administration, traditional and non-traditional lenders offer SBA loans. The program provides highly flexible rates and terms ideal for small businesses. There are several variations of SBA loans that help well-established hotels and motels looking to expand.

  Businesses must meet the following requirements to be eligible:

  • Operate for profit
  • Be considered a small business, as defined by the SBA
  • Be engaged in, propose to do business in, the United States or its possessions
  • Used alternative financial resources, including personal assets, before seeking financial assistance
  • Use the funds for a sound business purpose
  • Not be delinquent on any existing debt obligations to the U.S. Government.

  The three types of SBA loans listed below can benefit a small but growing hotel or motel.

  SBA 7(a) Loans: 7(a) loans tend to be the most common within the SBA family. With access to up to $5 million in working capital for a term of 25 years, numerous industries find these loan types are undoubtedly adequate for their needs. Interest rates tend to be between 7-8% depending on trade and the nature of your business. Most businesses who opt-in for an SBA loan will fall under this 7(a) category.

  SBA Microloans: This loan program provides funds up to $50,000 for borrowers to purchase inventory, supplies, or equipment or use as working capital loans. Microloans are an excellent option for businesses seeking a smaller loan amount to cover lesser expenses.

  SBA 504/CDC Loans: 504 loans are particular. It provides long-term, fixed-rate financing through Certified Development Companies (CDCs), SBA's community-based partners who regulate nonprofits and promote economic development within their communities. If your business needs to purchase commercial real estate or perhaps a large piece of equipment, this may be the ideal loan program. Borrowers may need to provide 20% of the loan's total value, the SBA provides 40%, and the lender will give the rest. The cap on this type of loan is generally $5 million.

  Businesses must meet the following requirements to be eligible:

  • Have a tangible net worth of less than $15 million
  • Have an average net income of less than $5 million after federal income taxes for two years preceding your application

• Business Lines of Credit: Banks, financial institutions, and other licensed consumer lenders often extend credit to creditworthy customers to address fluctuating cash flow needs.

  At a minimum, lenders will require your business to be operational for at least six months and able to earn $25,000 in revenue. Depending on the lender, a minimum credit score of 500 or higher may be required to qualify. By partnering with non-traditional lenders, companies can obtain their business line of credit within a matter of days.

• Long-Term Business Loans: This type of term business loan provides borrowers with a lump sum of funds with repayments at regular intervals of 5 to 25 years. This financing option is best for businesses that need significant capital at a lower interest rate. A long-term business loan has a fixed floating interest rate and monthly or bi-monthly payments deducted from a business bank account.

• Short-Term Business Loans: Short-term loans can be highly beneficial during a growth period, fluctuating cash flow times, or a need for seasonal purchasing. These loans assist the immediate financing needs of small to medium-sized businesses looking to enhance their activities. It provides a lump sum upfront to a borrower and has a repayment period ranging from three months to three years.

  The application process requires proof of ownership of your business, financial statements, tax information, P&L statements, and a copy of your driver's license. Lenders will check your business and personal credit as well. Short-term loans have almost no limitations on their uses, and borrowers can decide how to spend the funds once they receive them within 1-2 business days.

• Merchant Cash Advance (MCA): A merchant cash advance provides a fixed sum of money with a payback more significant than the lump sum upfront supplied to the merchant. Borrowers receive an upfront sum of cash in exchange for a portion of future credit and debit card sales or an upfront lump sum that is repaid by remitting fixed daily or weekly debits from a bank account.

• Equipment Financing: Businesses will often need to purchase, replace, repair, or upgrade various equipment to process, manufacture or produce their products or services. Lenders created this financing option to help businesses cover the costs of purchasing necessary equipment without disrupting their everyday business endeavors.

  Equipment can include phone systems, computer monitors, printers, copiers, tools, specialized machinery, and more. Most lenders will require three years of tax returns for the business, the purchase agreement of the equipment, personal financial statements, and identification of each owner.

How to Apply for Hotel and Motel Loans: Requirements and Getting Started

If your business has come to the point where funds are needed to generate a greater profit return, acquiring a small business loan may be the best option.

First Union is here to help.

Submit your business information below to determine if you qualify for any available small business loans. Our Funding Specialists will analyze your qualifications and will reach out to walk you through the following steps.

While each of the available loans have varying qualifications, lenders will typically ask for the following general information:

• Business Operation History
• Business Revenue Statements
• Personal & Business Credit Scores
• Collateral if needed

Online lenders like First Union Lending provide various hotels and motels with the funds needed to grow and succeed.

If you have questions in regards to any hotel or motel-related business loans, feel free to give us a call: 863-825-5626863-825-5626

Advantages of Utilizing Hotel and Motel Business Financing

Depending on the loan you qualify for, there are many benefits in partnering with an online lender to gain funds for your business initiatives. The funds from these financing options can solve various issues that arise during the day-to-day activities at your business.

It provides the working capital needed to maintain necessary maintenance equipment such as computers, software, furniture, towels, cleaning supplies, and more. Funds are not limited to purchasing and maintaining equipment, and businesses can use it to renovate and expand a site location to create an in-house bar or restaurant.

These funds can enhance your business advertising and onboarding of new employees to streamline your business better. Hotels can use this variety of loan options to improve their business to serve guests arriving from all over the world. Utilizing out-of-pocket funds can be expensive, and look to a lender to finance your initiatives and keep your business running.

Choose First Union Lending As Your Premier Lender

At First Union Lending, we have an unwavering belief that small and medium-sized businesses deserve the right to access the capital they need to succeed.

Our goal is to build long-term, lasting relationships by providing business owners with what they need when they need it. We pride ourselves on being educated, knowledgeable, and caring about how we conduct business. We have voluntarily acquired much of the same licensing traditional banks require to cement our fiduciary responsibility to our clients and work culture.

We are here to consult, help you save, and guide you and your business to success.