Getting a Loan: Advice from your Hotel Brokerage

If you’ve ever bought a hotel before, you’re probably very familiar with the financing process. However, if you’re looking into buying a hotel for the first time, the process may seem pretty intimidating. As a hotel brokerage, we’ve seen our clients use a variety of financing methods, so we’re very familiar with how the process works. Today, our hotel brokerage experts give a brief outline of what you can expect when financing your hotel.

How do I Finance a Hotel?

Generally, financing the purchase of a hotel or motel isn’t drastically different than financing a home. Of course, it’s a much bigger purchase, so you can expect some nuances. The most common methods of financing are conventional loans, SBA loans, and asset-based loans. There are plenty of other options, but today we’ll just focus on these. As with any method of financing, there are pros and cons to each. Our hotel brokerage experts recommend doing some deeper research when making your decision, but we can provide a surface level explanation of each.

Conventional Loans

Conventional loans will normally be through a bank. These are the loans that new buyers are usually most familiar with. Since the banks assume the full risk for these loans, you can expect the eligibility requirements to be pretty strict. Credit scores will play a big factor here.

SBA Loans

SBA loans, or Small Business Administration loans, are another option. If you’re making a significant purchase, these may not be perfect for you, but they can usually cover the cost of mid-range hotels. These loans are mostly backed by the federal government, so again, you can expect fairly stringent eligibility requirements. The upside is that these loans tend to have pretty good interest rates.

Asset-Based Loans

If you’re looking for really good interest rates, asset-based loans may be right for you. Of course, this all depends on whether or not you have the collateral necessary to obtain an asset-based loan for purchasing a hotel. The lender assumes less risk in these loans because if you default, they can simply seize the assets you’ve put forth. If you decide to go this route, it’s best to have an extremely secure financing plan in place so you don’t lose your assets.

Make the Decision That’s Best for You

Our hotel brokerage is happy to help you buy or sell a hotel or motel, but the question of financing is up to you. Remember, it’s best to do your research and seek advice when making a decision such as this. The information we’ve provided for you here is for your convenience. Keep in mind that it’s only surface level information.

Choose the Right Hotel Brokerage

If you’re ready to buy or sell, choose a hotel brokerage you can trust. Choose Southeast International Hotel Brokers. For more information, or to speak with a member of our team, please contact us today.