hotel renovation financing

Hotel Renovation Financing

Crystal Business Funding provides hotel renovation financing. Apply Now for quick and easy working capital for your business.

To obtain hotel renovation financing may seem like a challenge, but if you know what to do and where to look, it should be really simple and easy.

Renovating a hotel is a great investment, as it will attract new guests, and increase revenue. However, securing financing for a hotel renovation can be complex, so here's everything you need to know, in the most simple possible way.

What is Hotel Renovation Financing

Hotel renovation financing is a loan to upgrade or remodel a hotel. This type of financing will definitely improve your guest experiences, and add value to your property. A nice renovation will get you higher occupancy rates, and will increase your hotel's revenue.

Financing Options for Hotel Renovations

Merchant Cash Advances

A merchant cash advance is a great financing solution for hotels with steady revenue. An MCA is when a lender will give you a loan and in return they'll get a portion of your future sales, till the loan is paid off.

MCA for Hotel Renovations:

Speed:

MCA’s have the quickest funding process. This is ideal for hotel owners who can utilize the capital fast, and don't want to wait a couple months to hear back from a bank. By going with an online lender you'll get approved quickly, and can move forward with your renovations.

Flexible Repayment:

Repayments are based on a percentage of weekly sales, which will be more manageable than fixed monthly payments, and it makes it easier to make the loan payments as it's broken up into smaller payments.

Credit Scores:

MCA lenders will base the approval on your business’s revenue rather than your credit history.

Cons:

Costs:

The cost of borrowing with an MCA can be higher as there's no collateral and aren't necessarily based on a credit report.

Revenue-Based Financing

Revenue-based financing is also a good solution for securing funds for hotel renovations. Similarly to MCA, revenue based loans are based on your business's revenue. You repay the loan through a percentage of your future revenue.

Revenue-Based Financing for Hotel Renovations:

Cash Flow:

Payments are directly tied to your revenue, meaning they adjust with your hotel’s earnings. This will make things easier when business is slow.

Amount:

unlike other financing solutions, revenue based lenders can be very aggressive, and will have you approved for way more funds that you would get elsewhere.

Speed:

A revenue-based loan can take as quick as 24 hours to be approved and funded. Making it a great solution for fast hotel business loan needs.

Cons:

Cost:

The cost of a revenue-based loan can be higher, and have shorter terms

Online Lenders

Online lenders are very popular for hotel business loans because of how convenient it is. Online lenders usually offer a couple different loan solutions for different business needs.

Online Lenders for Hotel Renovations:

Convenience:

Many online lenders provide an easy application process, with fast approval times. It's definitely ideal for hotel owners seeking a quick business loan for a hotel project.

Loan solutions:

Online lenders usually provide MCA, revenue based financing, short-term loans, & lines of credit. Obviously depending on what you're eligible for, you can choose what works best for you.

Service:

when dealing with online lenders, the way it usually works is, you get a loan professional to get your business what it needs. Unlike banks, where you don't have someone dedicated to take care of your needs.

Cons:

Rates:

Online lenders may have higher interest rates compared to banks.

SBA Loans

SBA Loans can be a good choice for hotel business loans. SBA Loans are loans insured by the government, giving lenders/banks more confidence in providing the loans.

SBA Loans for Hotel Renovations:

Rates:

The rates of SBA Loans are between 8-11% APR making it the cheapest funding available, (unless you have some type of relationship with a local bank..).

Terms:

If you're looking for a long term loan, the SBA loan are typically 10 years terms.

Unsecured:

Depending on the type of Loan, the SBA 7(a) is unsecured up until $500k, if you need more than that you'll probably need to provide collateral.

Cons:

Time:

The average time for a SBA loan to get funded takes between 45-60 days minimum.

Requirements:

There are stricter requirements for the SBA loans, like a good credit score, and showing a profit on the past 3 tax returns.

Choosing the Right Financing Option

When deciding on the best financing solution for your hotel renovation, put the following factors into consideration:

Urgency:

If you need a quick hotel business loan to start renovations immediately, options like MCA and online lenders will be best.

Revenue:

Know what your finances look like, so you be able to determine what you'll be eligible for.

Cost and Terms:

Compare the cost of borrowing, repayment terms, and overall loan conditions to ensure you select the most favorable option.

A business loan for Hotels is a critical component of growing your business. Understanding the financing options available such as - merchant cash advances, revenue-based financing, online lenders, and SBA loans will help you make an informed decision and obtain the funds needed for a successful renovation.