The best hotel financing options will have a combination of low rates, flexible loan terms, easy qualification requirements, and excellent customer service. Funds from the best hotel loans can be used to cover different types of expenses. Some examples of this can include the purchase or renovation of a building, expenses associated with acquiring business equipment for the hotel, and other operational costs.
We’ve selected different types of loans depending on your intended use of the loan proceeds. This includes Small Business Administration (SBA) loans, commercial real estate (CRE) loans, hard money loans, business lines of credit, and equipment financing.
Here are our picks for the eight best hotel financing options:
- Lendio: Best overall for multiple financing options
- Clarify Capital: Best broker for SBA 7(a) loans
- U.S. Bank: Best conventional lender for commercial loans
- TMC Financing: Best for large loans and expertise in SBA 504 hotel funding
- Avana Capital: Best commercial bridge loan for hotels
- Kiavi: Best for small short-term financing needs
- Smarter Finance USA: Best for equipment financing
- Creditfy: Best flexible terms for a line of credit
Best Hotel Financing Options at a Glance
Getting financing for a hotel can be a complicated process. If you want to have a better experience, you can read our guide on how to get a small business loan. It can save you time by helping you figure out what paperwork to gather beforehand and how to present your business best when applying for a loan.
Lendio: Best Overall for Multiple Financing Options
Why We Like Lendio
We selected Lendio as the best overall pick because of the number of financing options you can get. It has a network of over 75 lenders, and working with Lendio means you’ll be assigned a dedicated funding specialist to match you with the best financing options based on your qualifications and business needs. For these reasons, Lendio was also selected as one of our best business loan brokers.
Lendio offers commercial mortgages and SBA loans that can be used for financing the repair or acquisition of a hotel. However, you’ll typically need to have strong finances and good credit to qualify. For its SBA loans, Lendio offers the SBA 7(a) program where funds can be used for nearly any day-to-day business-related use, something we detail in our SBA 7(a) guide. . Businesses in need of funds for financing fixed assets can consider the SBA 504 program.
To learn more or to submit an application, visit the Lendio website, where applications can generally be completed in under 15 minutes. Once you complete the online application, a member of the Lendio team will reach out to you shortly to discuss next steps, including requesting any supporting documentation to verify your eligibility.
Clarify Capital: Best Broker for SBA 7(a) Loans
Why We Like Clarify Capital
Clarify Capital is another broker on our list with over 75 lenders in its network. Because it advertises average rates as low as 5% for its SBA 7(a) loan program, we selected it as the best option to consider if you’re looking for an SBA 7(a) loan.
As with most brokers, working with Clarify Capital means you’ll get to work with a dedicated loan advisor. This can be especially helpful for SBA loans due to the heavy paperwork requirements often involved. Clarify Capital’s loan experts can help match you with the best SBA lender suited for your needs, walk you through the approval process, and even assist with gathering and filling out paperwork.
To learn more or to apply, visit the Clarify Capital website. Online applications can be completed in just a few minutes and will not impact your credit score.
U.S. Bank: Best Conventional Lender for Commercial Loans
U.S. Bank geographic limitation: You may be unable to get financing if you’re not located in one of the following states: Arizona, Arkansas, California, Colorado, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Minnesota, Missouri, Montana, Nebraska, Nevada, New Mexico, North Carolina, North Dakota, Ohio, Oregon, South Dakota, Tennessee, Texas, Utah, Washington, Wisconsin, or Wyoming.
Why We Like U.S. Bank
For hotel financing, we chose U.S. Bank as the best conventional lender for CRE loans. Compared to the other providers on our list, it offers the best overall combination of low rates, long repayment terms, and large loan amounts.
Its loan offerings include commercial real estate mortgages, SBA 7(a) loans, and SBA 504 loans. To qualify, it’s recommended that you have a credit score of 700, at least two years’ time in business, and a DSCR of at least 1.25x. Although its SBA loans can have lower down payment requirements of 10%, you may be expected to have 20% or more depending on the lender’s overall evaluation of your loan application.
This provider is a preferred lender with the SBA. This means that it has the authority to issue SBA loan decisions on its own. In contrast, lenders that do not have this designation must obtain a separate approval, which can add several days or weeks to the process.
To start the application process, you’ll need to call or complete the lender’s online form for a callback.
TMC Financing: Best for Large Loans and Expertise in SBA 504 Hotel Funding
Why We Like TMC Financing
TMC Financing is a provider that specializes in SBA 504 loans. While many SBA 504 lenders have a maximum funding amount of $5.5 million, TMC Financing has no stated maximum and has financed projects ranging in value from $500,000 to $44 million. Having also financed over $10 billion in SBA projects, it’s a good provider to choose if you’re looking for an experienced lender to walk you through the process.
If you get an SBA 504 loan from TMC Financing, loan payments will be fully amortized, so you won’t have any balloon payments to worry about. No additional collateral outside of the property being acquired is needed, and you also have the option to finance certain closing and other soft costs. However, in addition to closing and origination fees associated with getting the loan, a prepayment penalty will apply if the loan is paid off in the first 10 years.
Other requirements to qualify include the need to occupy at least 51% of the property within one year of funding for existing real estate. New construction, however, requires a 60% occupancy rate. Also, the tangible net worth of your business must not exceed $20 million. Check out our SBA 504 guide to learn about other requirements that apply to this program.
To apply, you can visit the TMC Financing website. Those located in Arizona, California, Nevada, or Oregon can get a complimentary pre-qualification analysis even before a property is identified.
Avana Capital: Best Commercial Bridge Loan for Hotels
Why We Like Avana Capital
Avana Capital’s core expertise is in the area of hospitality financing. Although it offers many different types of loans for hotels, we recommend it especially for short-term bridge loans. This is because its bridge loans have competitive rates, fast closing speeds, and low interest-only payments that can help alleviate potential cash flow concerns.
Avana Capital’s commercial bridge loans are designed to allow you to acquire or fund a renovation project while simultaneously looking for permanent long-term funding. While its funding products are targeted for those in the hospitality industry, it can also finance healthcare facilities, retail stores, restaurants, and more.
One downside is that the company does not provide much information about rates, terms, or qualification requirements on its website. It also does not allow you to apply online. Rather, you’ll need to provide your phone number to request the next steps if you’re interested in getting the process started.
Kiavi: Best for Small Short-term Financing Needs
Why We Like Kiavi
Compared to the other lenders in our guide that issue real estate financing, Kiavi’s loan amounts are on the smaller side. However, it offers competitive rates, flexible qualification requirements, and excellent customer service. For these reasons, we also selected it for our list of the best hard money lenders.
A perk of working with Kiavi is that as you gain more experience, you’ll get more benefits. Some examples include more competitive pricing and the ability to work with a dedicated account manager who can help facilitate faster funding speeds.
Another benefit of working with Kiavi is the fact that it’s possible to qualify with no income verification or property appraisal required. With fewer requirements, the lender can fund in as little as 10 days.
To apply, visit the Kiavi website.
Smarter Finance USA: Best for Equipment Financing
Why We Like Smarter Finance USA
Smarter Finance tops our list of the best equipment financing companies. It is a broker with over 37 lenders in its network, and unlike other brokers, it specializes in equipment financing options to improve your chances of getting approved. It offers loans and leases for a variety of equipment, including vehicles, heavy equipment, and construction.
Its team also has the necessary experience to present your business in the best possible way to secure competitive rates and loan terms. Plus, Smarter Finance has some of the most flexible repayment terms out of all the options in our guide, with options for weekly, monthly, seasonal, and deferred.
Applications are reviewed on a case-by-case basis, and there are no minimum requirements for time in business or revenue. The same is true for your credit score, but it’s recommended that you have at least a 600 to make it more likely to get approved. Applications can be completed online in just several minutes, with funding that can occur within one to four business days.
Creditfy: Best Flexible Terms for a Line of Credit
Why We Like Creditfy
Creditfy is another business loan broker on our list that can offer some of the most flexible loan terms and rates available. In addition to a competitive APR, you can get the longest repayment term and largest loan amount for a business credit line. Additionally, Creditfy can issue funding in as little as 24 hours.
It boasts a loan approval rate of 90%, meaning that meeting the minimum requirements listed above should give you very high odds of landing an approval. However, borrowers should keep in mind that the best rates and terms will typically require strong credit and finances of excess of the minimum stated eligibility criteria.
As is the case with many other business loan brokers, working with Creditfy allows you to work with a loan specialist to guide you through the process and present you with financing options based on your company’s unique needs, goals, and qualifications. To give you the best experience, Creditfy requires all of its lending specialists to have at least two years of industry experience, and it also has exclusive partnerships with certain lenders.
To apply, you can visit the Creditfy website and complete an application in just several minutes.
How We Chose the Best Hotel Loans
We considered the following criteria when selecting the best hotel loans:
- Interest rate, fees, and estimated APRs
- Loan terms, such as repayment period and loan amount
- Qualification requirements, such as credit score, time in business, and revenue
- Funding speed
- Type of financing offered
- Industries served
- Customer reviews and ratings
Alternatives to Hotel Loans
Since funding a hotel can be a complex process involving different categories of expenses, you may need to consider multiple types of loans to find one best suited for those costs. We’ve presented options above for several loan types, including SBA loans, hard money loans, equipment loans, bridge loans, and a small business line of credit.
If you’re having trouble getting approved or want to explore rates and terms available for other loans, here are some alternatives you can consider:
- Rollover for business startups (ROBS): A ROBS is not a loan, so this is a good option if you don’t want to pay interest fees. It allows you to access your retirement accounts tax- and penalty-free for business purposes. You can read our guide on how a ROBS works to learn more about whether it could be right for you.
- Personal loan for business purposes: If you don’t need a large amount of funding, a personal loan could give you a more competitive rate than a business loan. See our recommendations for the best personal loans for business funding.
- Loans from friends or family: Compared to bank loans, you can often get a lower interest rate by borrowing money from friends and family. Head over to our article for tips on how to ask friends and family to fund your business.
Frequently Asked Questions (FAQs)
Common types of loans that can be used to buy a hotel include SBA loans, commercial real estate loans, bridge loans, and hard money loans. Once you find a lender that offers these financing options, you should also check to see if it has any restrictions on property types.
Since a hotel loan is secured by the property itself, it can be easier to get than an unsecured loan. For example, it’s possible to get financing with bad credit, but you’ll still need to demonstrate strong finances as proof that you can afford the loan payments. Additionally, many hotel loans require a downpayment between 10% and 25%.
Hotel loans often have fees ranging from 2% to 4% of the loan amount, with interest rates that run from 6% to 12% depending on your qualifications. These figures can also vary depending on the lender and type of loan you choose.
Bottom Line
The best hotel financing options we’ve selected can provide competitive rates and excellent customer service. Since getting business loans for hotels can be a complex process, our guide also includes different types of loans, so you should be able to find one well-suited to your needs. As always, we recommend contacting multiple lenders to ensure you’re getting the best rates possible.
