If you’re thinking of purchasing a hotel, it’s important to know what your financing options are. Hotel loans can help you get the upfront capital you need to complete the purchase and maintain operations until your hotel is profitable. In this article, we’ll discuss using financing for a hotel purchase and some things it’s important to tell your lenders.
Using Hotel Loans to Acquire a Hotel
Many entrepreneurs find success in the hospitality industry by purchasing an existing hotel. This reduces a lot of the start-up challenges. However, hotel acquisitions do come with quite the price tag. While you can certainly fund the purchase and operating capital yourself, most people need hotel loans to make this happen. After all, the average hotel franchise will typically cost around $200,000 or more for well-known brands.
There are many types of hotel loans you can use for acquisitions. Some of these include:
- Bridge loans
- Preferred equity loans
- Mezzanine loans
- Permanent loans
Your hotel lending experts can help you determine which options work best for your circumstances. Generally, one will be better than another for your specific needs.
Important Information to Tell Your Hotel Lending Team
Of course, your lenders will need to know some key details before approving financing. Our team can give you an exact list of the things we need, but there are some things you can start on beforehand.
Obviously before you decide to take the plunge, you’ll determine feasibility for the purchase and running of the hotel. This includes things like looking at your finances, assessing how you will go about running the hotel, and maybe building a team of professionals you intend to bring with you. All this is important not only for you, but for the lending team to see.
It’s also essential to consider some of the particulars. Before you secure financing, you likely won’t know the exact property you’re looking to buy. However, you can hash out some of the details like the market you plan to cater to, the general geographic location, and approximately how large of a hotel you want to purchase. Having a basic business plan is also helpful, including some basic financial plans and forecasts.
Once you find the property you want to purchase and negotiate a good price, our loan originators may need information about the property itself, such as the appraisal value, estimated revenue, and specific market information.
Our team can help you determine exactly what information and documents you need for your loan, but it helps to do some preliminary research.
Stonehill – Specializing in Hospitality Lending
When you need hotel loans, our team at Stonehill is here for you. Our team has lent billions to the hospitality industry since our founding eight years ago. We have provided funding for hotels throughout the U.S. for everything from acquisitions to property improvements. We also offer hotel construction financing for new builds. Our team specializes in hospitality lending, which means we understand the unique challenges you face as a hotelier. We are committed to providing creative financing solutions for all your needs. Contact us now to get started.