First impressions can have a lasting impact. Ensuring that your hotel makes the most positive impression on guests is essential to stay profitable and relevant in the modern hospitality industry. Regular updates and renovations may even be required by your franchise through a property improvement plan (PIP) agreement signed at the time of acquisition. Renovating your hotel can be an expensive process, however. Finding the right hotel loans can help you to manage the expense and disruption of these activities more easily to maintain greater productivity now and well into the future.
Hotel Financing for Renovation Projects
The U.S. Small Business Administration (SBA) offers loan programs for small to medium-sized businesses in the hospitality industry:
- SBA 7a loans are designed specifically for the acquisition of commercial real estate and are available in amounts up to $5 million and for terms of up to 25 years.
- SBA 504 loans work in a similar way but offer larger loan amounts of up to $20 million. The loan terms are shorter and range between 10 and 20 years.
The restrictions and paperwork associated with these government-backed loans, however, can be a significant deterrent for hotel owners and managers looking for the right hotel construction financing options. There are other options for financing hotel renovations in the lending marketplace:
- Refinancing your hotel can provide you with cash on hand to manage upgrades to furniture, fixtures and equipment or to fund structural improvements. This approach typically requires that you already have significant equity in your hotel and may require you to provide a detailed plan outlining what the funds will be used for during your renovation project.
- Business lines of credit can be used to fund smaller renovations, including updating signage and replacing flooring in selected areas.
- Conventional bank loans are often available for companies that have an existing relationship with the lending institution and a clean credit record.
- Bridge loans, as their name suggests, are designed to bridge the gap between necessary funding and the acquisition of longer-term or more favorable financing terms and arrangements.
Finding the right hotel loan for your planned renovations can help you manage these necessary tasks to keep your facilities looking their best for your guests.
Stonehill offers hotel loans designed specifically to suit the needs of the hospitality industry. We can design a renovation loan that is tailor-made to supply the cash you need for your upcoming renovation project. Our expert loan originators can provide you with the right guidance and financial solutions for your hotel. Call us today at 713-666-2544 to discuss your funding requirements with us. We look forward to the chance to serve you.