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.
| Financing type | Typical Amount | Pros | Cons | |
|---|---|---|---|---|
| Commercial property loan | Up to 80% of the property’s value |
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| Read our guide to commercial property loans |
| Equipment financing | Up to your equipment’s total cost |
|
| Read our guide to equipment financing |
| Line of credit | $10,000 to $1,000,000 |
|
| Read our guide to business lines of credit |
| Term loan | $25,000 to $5,00,000 |
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| |
| Unsecured loan | $1,000 to $100,000 |
|
| Read our guide to unsecured business loans |
| Invoice financing | Up to 95% of the value of invoices due |
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| Read our guide to invoice financing |
| Merchant cash advances | $2,000 to $50,000 or up to around 25% of your annual revenue |
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| Read our guide to merchant cash advances |
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:
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:
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.
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:
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.
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:
A complete list of business loan requirements
