When you think of hotel loans, you likely think of the debt you take out when you first began. However, hospitality loans can also help you recapitalize your business. Hotel owners should always be looking for restructuring options as a proactive step toward keeping your capital stack optimal. Therefore, learn more about hotel loans and how they can help you rearrange your finances.
Benefits of Recapitalization
Recapitalization helps you maximize your cash flow, which is always a positive thing in the hospitality industry. Using hotel loans to recapitalize gives you the ability to do many different things. For example, larger corporations can expand or tap into new markets with the right hotel loans for recapitalization. Smaller or newer hotels may recapitalize to have the capital available to expand their staff or invest in new equipment.
Additionally, many in the hospitality industry use hotel financing to help increase their stock price. If your stock price falls suddenly, you likely need to act fast. Quickly recapitalizing allows you to buy back your shares to increase the demand. Most often this results in rising stock price. Therefore, you should be prepared to recapitalize at any point so you can quickly resolve any issues your hotel may face.
Hotel Loans for Recapitalization
So, recapitalization allows you to raise money by restructuring your capital stack. However, which hotel loans are right for your recapitalization? Generally, hotel owners use one of two common hospitality loans to recapitalize: mezzanine or preferred equity financing.
Mezzanine hotel financing allows you to add debt capital to your financing structure without giving up equity. To acquire mezzanine financing, there needs to be an inter-creditor agreement before you’re approved for this hotel loan.
By contrast, preferred equity doesn’t require an inter-creditor agreement with your senior lenders. Instead, it is an equity investment for your hotel lender. Depending on what you are trying to achieve from your recapitalization, choosing the right hotel loans and hospitality lender is imperative for your hotel. Choosing the situation that suits your needs can make or break your hotel. Therefore, work with a direct hospitality lender with experience in the industry.
At Stonehill, we provide innovative hotel financing solutions for a wide range of uses. From acquisitions, recapitalizations, and hotel construction financing, our experts have the knowledge and insight you need. Our team helps you find the best financing options for your needs. We help you find creative financing opportunities that will help you succeed now and in future. Contact the experts at Stonehill today to learn more and start your approval process. We look forward to the opportunity to work with you.