Hotel bridge lending is a good solution when you’re waiting for longer-term financing. These loans are commonly used when acquiring hotels, renovating, or even rescuing distressed hotels. These loans offer many advantages, but there are some things to know first. In this blog, we’ll discuss what bridge loans are and the pros and cons for hotels.
If you need financing solutions for your hotel, contact our team today.
What is Hotel Bridge Lending?
Hotel bridge lending is a type of financing. It’s generally short-term and used in situations where you’re waiting on longer-term financing like permanent hotel loans. Essentially, they’re meant to bridge some type of gap in financing or capital, which is where the name comes from.
There are many ways you can use bridge loans for your hotel, including:
- Construction takeout
- Gap financing
- DIP/Rescue capital
Bridge loans from Stonehill can be anywhere from $10 million to $100 million with rates starting at 9%. The loan to value and loan to cost are up to 75% and the term is between one and five years.
Generally, bridge loans are set for a predetermined amount of time so the lender knows when to expect repayment. In rarer cases, this may be left open, but still generally is short-term and only lasts a number of years.
Pros and Cons of Bridge Hotel Loans
Like with any type of hotel financing, bridge loans come with pros and cons that you need to consider carefully. One advantage of hotel bridge lending is that you get capital you need pretty quickly. Bridge loans often close much faster than other types of loans. This allows you to act quickly and refinance later. Also, these loans are shorter term so you don’t need to worry about prepayment penalties if you only need financing for a few years.
There are disadvantages too, so bridge loans aren’t the right option for every situation. For one, they tend to come with higher rates than many other types of loans. Also, the exact loan details like interest rates, terms, and other factors really depend on the risk to the lender, so it’s hard to know exactly what the loan will look like until you discuss your financing needs with our team.
Get Hotel Financing from Stonehill
When you need financing solutions for your hotel, our team at Stonehill is here to help. We offer creative solutions to provide you with the capital you need for everything from renovations and acquisitions to distressed property rescues. With nearly a decade in business, we have quickly become one of the top direct hospitality lenders in the industry. Since our founding in 2014, we’ve provided over $5 billion in financing to hotels throughout the nation. Get in touch now to learn more and get the funding you need.