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Compare business loans for hotels

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Family checking in to hotel

Find the right finance solution to help you buy, upgrade or manage a hotel.

Running a hotel is a thrilling and sometimes challenging job. Regardless of whether you’re buying an existing hotel, starting a new establishment or looking to give your venue a much-needed makeover, you’ll probably need to borrow money to turn the vision you have for your business into a reality.

The good news is there’s a huge range of finance options available to suit your hotel business needs, so let’s take a closer look at how a business loan could help you.

LoanBuilder, A PayPal Service Business Loans

Our top pick: LoanBuilder, A PayPal Service

Customizable business loans with no hidden fees.

  • Min. Amount: $5,000
  • Max. Amount: $500,000
  • One-time fixed fee charged over the life of the loan
  • Acclaimed customer service
  • Requirements: $100,000+ annual revenue, 1+ years in business, 600+ personal credit score

    Seven types of financing to consider for hotels

    Financing type Typical Amount Pros Cons
    Commercial property loan Up to 60%-65% of the purchase price
    • Provides the funding you need to buy a hotel
    • Flexible repayments
    • Wide range of loans available
    • A very detailed business plan is typically needed to qualify
    • Since lenders classify hotels as “special use” commercial properties, you may only be able to finance a small percentage of the property’s value
    Read our guide to commercial property loans
    Equipment financing Up to your equipment’s total cost
    • Provides the funds you need to purchase expensive equipment
    • The equipment you buy acts as collateral for the loan
    • Wide range of finance options to choose from
    • Flexible repayment schedules can be tailored to suit your business
    • Fixed and variable rates available
    • Fees and interest charges increase costs
    • Can be difficult to determine which option is the best fit for your business
    Read our guide to equipment financing
    Line of credit $10,000 to $1,000,000
    • Access a line of credit whenever you need funds to cover business costs
    • Can help you overcome short-term cash-flow shortages
    • Only pay interest on the money you borrow
    • Borrowing a smaller amount means reduced risk
    • You can negotiate fixed or ongoing terms
    • May not provide all the funds you need to purchase a business
    • Interest charged monthly
    • Ongoing fees apply
    • You’ll need a good credit history to qualify for a line of credit
    Read our guide to business lines of credit
    Term loan $25,000 to $5,00,000
    • Borrow the funds you need to pay for purchases and manage your business
    • Repay your debt over a fixed period
    • Security and consistency of regular repayments
    • Fixed and variable interest rates available
    • Wide choice of loans from an extensive range of lenders
    • Terms of 15 years or more available
    • Most fixed-term business loans require collateral
    • Doesn’t offer the same repayment flexibility as other options
    Read our guide to business term loans
    Unsecured loan $1,000 to $100,000
    • Fast access to cash
    • Easy application process
    • No security required
    • Handy to help manage short-term cash-flow problems
    • Attracts higher fees and interest rates than other loan options
    • Short repayment terms
    • High fees if you fall behind on repayments
    Read our guide to unsecured business loans
    Invoice financing Up to 95% of the value of invoices due
    • Access money you’re owed before transactions to go through
    • No collateral necessary
    • Makes planning your finances easier
    • Pay fees on something that could have been free
    • You have to repay even if your customers don’t
    Read our guide to invoice financing
    Merchant cash advances $2,000 to $50,000 or up to around 25% of your annual revenue
    • Fast funding
    • Repayments decrease if your profit takes a dip
    • No security needed
    • Good credit not always necessary
    • Can be expensive
    • Risky if you can’t easily predict future profits.
    Read our guide to merchant cash advances

    Online business loans you can compare today

    Rates last updated January 19th, 2019
    Unfortunately, none of the business loan providers currently offer loans for these criteria.
    Name Product Product Description Min Loan Amount Max. Loan Amount Requirements
    LoanBuilder, A PayPal Service Business Loans
    Customizable loans with no origination fee for business owners in a hurry.
    Annual business revenue of at least $42,000, at least 9 months in business, personal credit score of 550+.
    Kabbage Small Business Line of Credit
    A simple, convenient online application could securely get the funds you need to grow your business.
    1+ years in business, $50,000+ annual revenue or $4,200+ monthly revenue over last 3 months
    Credibly Business Loans
    Funding to cover business expenses with daily or weekly repayments.
    9+ months in business, $42,000+ annual business revenue, 550+ personal credit score
    LendingClub Business Loans
    With loan terms that vary from 1 to 5 years, enjoy fixed monthly payments and no prepayment penalties through this award-winning lender.
    12+ months in business, $50,000+ in annual sales, no bankruptcies or tax liens, at least 20% ownership of the business, fair personal credit score or better
    LendingTree Business Loans
    Multiple business financing options in one place including: small business loans, lines of credit, SBA loans, equipment financing and more.
    Varies by lender and type of financing
    Varies by lender and type of financing
    Varies by lender, but you many require good personal credit, a minimum business age and minimum annual revenue.
    Lendio Business Loan Marketplace
    Submit one simple application to potentially get offers from a network of over 75 legit business lenders.
    Must operate a business in the US or Canada, have a business bank account and have a personal credit score of 560+.

    Compare up to 4 providers

    Which hotel business loan is right for me?

    Whether you’re starting a new hotel or taking over the reins, there are plenty of upfront and ongoing expenses you will need to take into account. In addition to apparent costs, there are other factors you need to consider including:

    • Why you need finance. Are you buying a hotel, purchasing new equipment, looking for a way to manage cash flow or borrowing for some other reason? This will influence the types of loans available to you.
    • Your assets. Do you have valuable assets you can offer as security for the loan? If so, this will increase your borrowing power and also broaden the range of products you can access.
    • Your credit history. It’s much easier for borrowers with good credit history to find financing than it is for borrowers with imperfect credit history.

    Top expenses to consider

    When opening a new hotel

    Are you dreaming of opening your own hotel or restaurant? If so, remember that starting any kind of new business from scratch is a huge undertaking and one with many traps and pitfalls along the way. You may be surprised to discover just how quickly all the separate costs involved can add up to a substantial amount.

    With this in mind, make sure to include the following expenses in your calculations when planning to open a new hotel:

    • Buying or leasing office space
    • Loan fees and interest charges attached to your commercial property loan
    • Filling out the space and finalizing interior decor
    • External maintenance and signage costs
    • Furniture
    • Catering equipment for the hotel kitchen
    • Buying any sound, lighting and IT supplies needed to run the business
    • Hiring staff and paying their wages
    • Marketing and advertising costs
    • Web design expenses
    • Insurance coverage
    • Licensing costs, not only for liquor, but also for food safety and accommodation permits

    This is why it’s a great idea to develop a comprehensive business plan for your new hotel. This will help you develop a clearer picture of your financial situation – allowing you to budget for all potential future expenses that may arise.

    When purchasing an existing hotel

    If starting a new business from scratch sounds daunting, you may decide that you’re better off purchasing an existing hotel. After all, if you can find an affordable property in a good location that has a solid customer base, a lot of the hard work will have already been done for you.

    However, there are still several expenses you’ll need to consider when working out your financial requirements, including the following:

    • Purchasing costs depend on whether you are buying the business and leasing the premises or buying both the business and the premises
    • Interest charges and other loan fees
    • Renovation costs (both interior and exterior) if you want to give the hotel a new look
    • Upgrades to furniture
    • Upgrades to other equipment, for example kitchen appliances or sound and lighting equipment
    • Marketing and advertising costs to promote the fact that the hotel is under new management
    • Any relevant licensing costs

    Then there are the other ongoing costs you’ll need to consider to effectively manage your business from day to day. These include having enough working capital to manage cash flow, paying all the necessary insurance premiums, paying staff wages and generally keeping your business as clean, inviting and up to date as possible.

    What to look for in a hotel loan

    • Low costs. Interest rates have a huge bearing on how much a loan will cost you in total over the entire term. Shop around to see which lender offers the lowest rate, but remember that there may also be high loan fees attached. Since loans can come with fixed or variable interest rates, be sure to only compare fixed-rate loans with other fixed-rate loans and variable-rate loans with other variable-rate loans. On the other hand, it’s easy to be sucked in by a great interest rate and not take any loan fees into account. When considering fees, remember to look not only for upfront and ongoing fees, but also for any penalties if you miss a repayment.
    • Favorable terms. How long will you have to repay the funds you borrow? If you’re considering a short-term loan, will you be able to afford the repayment amounts? On the flip side, are you aware of just how much extra it will cost with a longer loan term?
    • Flexible repayment schedule. Next, take a look at the repayment schedule the lender offers – can you tailor it to suit the unique income and expense requirements of your business? You should also consider how much the regular repayment amount will be – is it a figure you can reasonably afford to repay every week, biweekly or month?
    • Expert assistance. Finding finance for any type of business can be confusing, so it’s worth talking with a business financing expert to help you assess all your options to choose the best one. Some online lenders will pair you with a representative after you inquire.

    4 tips to maximize your chances of approval

    Preparing a comprehensive application that satisfies all the relevant criteria is the best way to increase the chances of being approved for a loan. Of course, there are a few other things that will help the lender view your application in a more positive light:

    1. Get experience. Managing a restaurant or hotel is a dream for many Americans, but new venue owners are often unaware of just how complicated running a business can be. Being able to call upon experience in the hospitality industry will help make the day-to-day running of your new business easier and will also ensure that the lender views you as less of a risk.
    2. Develop a business plan. Many lenders will request a comprehensive business plan when you apply to finance a hotel. This requires you to outline a realistic plan and explain how you will make a profit. It’s essential that you provide detailed information and projections to help the lender make an informed decision about whether or not to offer you a loan.
    3. Know your numbers. The lender will want a full picture of the business’s financials before approving a loan, especially if you’re buying an existing hotel. Provide detailed information about the hotel’s current financial performance, including tax returns, a statement of profit and loss and a balance sheet to increase your chances of approval.
    4. Offer an asset as security. If you’re willing to offer an asset as collateral for your loan, this can significantly increase your borrowing power.

    A complete list of business loan requirements

    Frequently asked questions about business loans for hotels

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