Permanent hotel loans offer many advantages compared to other types of loans. We regularly provide permanent loans to successful hotels and premium hospitality brands. In this article, we’ll discuss what permanent loans are and how they can help you expand your hotel business.
What Are Permanent Hotel Loans?
Permanent hotel loans are a type of hotel financing. Despite their name, these loans aren’t necessarily permanent, just much longer-lasting than other types of loans. Permanent loans often last decades and are usually used for real estate that serves as the collateral for the loan. When it comes to permanent loans for hotels, the hotel is generally the collateral.
Naturally, the specifics of the loan depend on the lender and the borrower. However, here’s some general information about the permanent loans we offer at Stonehill:
- Loan Term: 5, 7, or 10 years
- Amortization: 20 to 30 years
- Amount: $5 million to $50 million
- Loan to Value: Up to 75%
- Loan to Cost: Up to 80%
- Interest: Fixed 4.5% to 6.5%
Our permanent loans are also non-recourse except with carve outs. There is a 0% loan fee for our permanent hotel loans.
When to Use This Type of Hotel Financing
If you’re interested in permanent loans for your hotel, talk to our hotel lending team to determine whether this type of financing is right for you. We can discuss your options based on the specifics of your property and financing needs.
However, in general, permanent loans are best for successful properties and brands with solid cash flow. These loans work well for refinancing other, shorter term loans. For instance, it’s common to take out permanent hotel loans to refinance a construction loan. You might also use it to refinance other debt for your property.
Also, permanent loans are common to use for acquisitions as well. This allows you to grow your portfolio without sacrificing cash flow for your current properties. Permanent loans allow you to purchase additional properties and grow without putting financial strain on your other operations.
You can get permanent loans from a variety of sources, including banks. However, many banks and credit unions do require incredibly stringent criteria before providing permanent loans. Many banks are hesitant to provide permanent loans because of the risk associated with them. Additionally, they don’t offer any additional hotel-specific experience to leverage.
That’s why many hospitality property managers work with direct lenders. Direct lenders like Stonehill typically specialize in a particular market. For instance, we focus on hotel lending and therefore offer not only financing solutions, but expertise for the hotel and hospitality industry to help borrowers position themselves for success.
Hotel Lending Solutions from Stonehill – Direct Hotel Lender
Our team at Stonehill is here to provide you with strategic, creative financing solutions for your hotel brand. We are a direct lender for the hospitality industry and have quickly grown to be one of the top direct hotel lenders in the nation since our founding in 2013. We have completed countless transactions for some of the largest brands in the country. Get in touch today to discuss your hotel financing needs with our experts.