7 Best Hotel Loans for 2023
This article is part of a larger series on Business Financing.
The best hotel financing options will have low rates, flexible loan terms, and good customer reviews. Lenders may also allow you to use the funds for a variety of purposes, such as purchasing, renovating, or covering other costs associated with the building. Since the best loan will depend on your specific circumstances, we’ve selected lenders offering different types of loans. These include commercial real estate (CRE) mortgages, Small Business Administration (SBA) loans, hard money loans, and equipment financing.
Here are the seven best hotel financing options for 2023:
- Lendio: Best overall for multiple financing options
- US Bank*: Best conventional lender for commercial loans
- Kiavi: Best for smaller short-term financing options
- Avana Capital: Best commercial bridge loan for hotels
- TMC Financing: Best for industry expertise in hospitality and SBA 504 loans
- Smarter Finance USA: Best for equipment financing
- Bluevine: Best small business line of credit
*Provider is geographically limited. View US Bank’s geographic limitations to see if your business is in an area served by the bank.
Best Hotel Loans at a Glance
Loan Type | Estimated Starting Annual Percentage Rate (APR) | Maximum Loan Amount | Maximum Loan Term | Minimum Time in Business | Minimum Credit Score | |
---|---|---|---|---|---|---|
SBA/CRE | 5% | $5 million | 25 years | 6 months | 600 | |
SBA/CRE | 6.99% | $12.375 million | 25 years | 2 years | 700 | |
Hard money | 9% | $1.5 million | 2 years | None | 660 | |
Commercial bridge | 7% | $20 million-plus | 3 years | 3 years | 680 | |
SBA 504 | 6.5% | $25 million-plus | 25 years | 2 years | Varies | |
Equipment financing | 7% | $1 million | 5 years | None | None | |
Line of credit | 6.2% | $250,000 | 12 months | 2 years | 625 | |
Getting financing for a hotel can be a complicated process. If you want to have a better experience, you can read our guide on how to get a small business loan. It can save you time by helping you figure out what paperwork to gather beforehand and how to best present your business when applying for a loan.
Lendio: Best Overall for Multiple Financing Options
Rates & Terms | |
Estimated APR | 5% to 11.5% and up |
Loan Amount | $250,000 to $5 million |
Minimum Down Payment | 10% |
Repayment Term | 5 to 25 years |
Repayment Method | Monthly |
Closing Costs & Fees | Varies |
Funding Speed | 45 to 90 days |
Loan Type | Commercial mortgage, SBA 7(a), and SBA 504 loans |
Qualifications | |
Credit Score | 600 |
Time in Business |
|
Debt Service Coverage Ratio (DSCR) | 1.25x |
Annual Revenue | $96,000 |
Lendio, one of our best business loan brokers, has a network of over 75 lenders, making it a good choice if you want to have multiple loan options to choose from. With a large number of lending partners, you’ll have a better chance of landing an approval.
Another benefit is that after you apply, you’ll be paired with a funding specialist to discuss your business needs. This is done so that you can be matched with a loan best suited for your goals.
The provider offers different types of loans, including commercial mortgages, SBA 7(a), and SBA 504 loans. Depending on the loan you apply for, you could get rates as low as 5%. Other loan terms include loan amounts up to $5 million and repayment terms up to 25 years.
If you have bad credit, Lendio can be an option for you as it only requires a minimum credit score of 600. Other requirements include at least $96,000 in annual revenue and six months’ time in business. SBA loans have a higher requirement of two years’ time in business.
To learn more, you can visit Lendio’s website. There, you can begin the application process, which consists of a handful of basic questions. Once that is completed, you’ll be given additional instructions via an email or phone call to upload supporting documentation.
US Bank: Best Conventional Lender for Commercial Loans
Rates & Terms | |
Estimated APR | 6.99% and up |
Loan Amount |
|
Minimum Down Payment | 20% |
Repayment Term | Up to 25 years |
Repayment Method | Monthly |
Closing Costs & Fees | 2% to 4% of loan amount |
Funding Speed |
|
Loan Type | CRE and SBA loans |
Qualifications | |
Credit Score | 700 |
Time in Business | 2 years recommended, but can vary |
DSCR | 1.25x |
Annual Revenue | None |
For hotel financing, we chose US Bank as the best conventional lender for CRE loans. Compared to the other providers on our list, it offers the best overall combination of low rates, long repayment terms, and large loan amounts.
Its loan offerings include commercial real estate mortgages, SBA 7(a) loans, and SBA 504 loans. To qualify, it’s recommended that you have a credit score of 700, at least two years’ time in business, and a DSCR of at least 1.25x. Although its SBA loans can have lower down payment requirements of 10%, you may be expected to have 20% or more depending on the lender’s overall evaluation of your loan application.
This provider is a preferred lender with the SBA. This means that it has the authority to issue SBA loan decisions on its own. In contrast, lenders that do not have this designation must obtain a separate approval, which can add several days or weeks to the process.
To start the application process, you’ll need to call or complete the lender’s online form for a callback.
Kiavi: Best for Smaller Short-term Financing Options
Rates & Terms | |
Estimated APR | 9% and up |
Loan Amount | $75,000 to $1.5 million |
Minimum Down Payment | 10% |
LTV & ARV | 90% LTV and 75% ARV |
Repayment Term | 12, 18, or 24 months |
Repayment Method | Interest-only with balloon payment |
Closing Costs & Fees | 1.5% to 2% of the loan amount |
Funding Speed | As fast as 10 days |
Loan Type | Hard money fix-and-flip and bridge loans |
Qualifications | |
Credit Score | 660 |
Time in Business | None |
Annual Revenue | Varies |
Out of the providers in our guide that issue real estate financing, Kiavi’s loan amounts are on the smaller side. However, it offers competitive rates, flexible qualification requirements, and excellent customer service. For these reasons, we also selected it for our list of the best hard money lenders.
With Kiavi, you can get financing for up to $1.5 million with rates as low as 9%. Repayment terms can be as long as 24 months, making this better suited as a short-term bridge loan. This provider requires you to have a credit score of 660 and is able to work with new investors who have no prior investment experience.
As you gain more experience, you’ll get more benefits with Kiavi. Some examples include more competitive pricing and the ability to work with a dedicated account manager who can help facilitate faster funding speeds.
Another benefit of working with Kiavi is the fact that it’s possible to qualify with no income verification or property appraisal required. With fewer requirements, the lender can fund in as little as 10 days.
Avana Capital: Best Commercial Bridge Loan for Hotels
Rates & Terms | |
Estimated APR | 7% to 12% |
Loan Amount | $500,000 to $20 million and up |
Minimum Down Payment | 25% |
Repayment Term | 12 to 36 months |
Repayment Method | Interest-only with balloon payment |
Closing Costs & Fees | Varies |
Funding Speed | As fast as 10 days |
Loan Type | Commercial bridge loan |
Qualifications | |
Credit Score | Varies, but 680-plus is recommended |
Time in Business | Varies, but 3 years is recommended |
DSCR | Varies, but 1.4x is recommended |
Annual Revenue | None |
Avana Capital specializes in several areas, one of which is hospitality real estate. Combined with its competitive rates and fast funding speeds, it’s a good lender to consider for a short-term commercial bridge loan.
This provider’s bridge loan is commonly used to purchase or finance the renovation costs for a hotel. You can get up to $20 million or more in funding with repayment terms between 12 and 36 months, at which point it is expected that you’ll replace the loan with a more permanent source of financing.
Highly qualified businesses can get rates that start at around 7%. This provider does not disclose its minimum qualification requirements, but it’s recommended that you have a good credit score of at least 680, three years’ time in business, and a DSCR of 1.4x. You’ll also need a down payment of at least 25%, calculated using the as-complete value of the building.
Other products offered by Avana Capital include SBA 504 loans and construction loans. It also has financing for businesses in the cannabis industry.
Applications cannot be completed online. However, you can complete an online request for a return phone call.
TMC Financing: Best for Industry Expertise in Hospitality & SBA 504 Loans
Rates & Terms | |
Estimated APR | 6.5% and up |
Loan Amount | $25 million and up |
Minimum Down Payment | 15% |
Repayment Term | Up to 25 years |
Repayment Method | Monthly |
Closing Costs & Fees | $2,500 attorney fees plus 2.5% to 3% of the loan amount |
Funding Speed | 30 to 60 days |
Loan Type | SBA 504 loan |
Qualifications | |
Credit Score | Varies (undisclosed) |
Time in Business | 2 years recommended |
DSCR | 1.25x |
Annual Revenue | None |
TMC Financing is highly experienced with SBA 504 financing and hotel loans, making it a good choice if you want a knowledgeable lending partner. Additionally, while many SBA 504 lenders only issue loans up to the typical SBA-insured amount of $5 million, this provider offers financing of $25 million and up.
Rates start at around 6.5%. To be considered for hotel financing, you’ll need a down payment of at least 15%, two years’ time in business, and a DSCR of 1.25x. The provider does not disclose credit score requirements, so it’s a good idea to check your eligibility immediately after applying.
Eligible businesses include both independent and franchised hotels. If approved for a loan, funds can be used for the purchase, construction, and expansion of the building. You can also use it to cover expenses for equipment and furnishings.
TMC Financing gives you the option to apply online, and you can start this process even before you find a building to purchase. Completed applications are reviewed by the lender, after which a prequalification can be issued within 18 to 48 hours. This prequalification can serve as additional confirmation of your loan eligibility and give you an advantage when it comes to making an offer on a property.
Smarter Finance USA: Best for Equipment Financing
Rates & Terms | |
Estimated APR | 7% to 20% |
Loan Amount | $10,000 to $1 million |
Minimum Down Payment | 0% to 35% |
Repayment Term | 24 to 60 months |
Repayment Method | Weekly, monthly, seasonal, and deferred |
Closing Costs & Fees | $399 documentation fee |
Funding Speed | 1 to 4 days |
Loan Type | Equipment financing |
Qualifications | |
Credit Score | None, but 600-plus is recommended |
Time in Business | None |
Annual Revenue | None |
Smarter Finance tops our list of the best equipment financing companies. It is a broker with over 37 lenders in its network, and unlike other brokers, it specializes in equipment financing options to improve your chances of getting approved. It offers loans and leases for a variety of equipment, including vehicles, heavy equipment, and construction.
Its team also has the necessary experience to present your business in the best possible way to secure competitive rates and loan terms. Plus, Smarter Finance has some of the most flexible repayment terms out of all the providers in our guide, with options for weekly, monthly, seasonal, and deferred.
Applications are reviewed on a case-by-case basis, and there are no minimum requirements for time in business or revenue. The same is true for your credit score, but it’s recommended that you have at least a 600 to make it more likely to get approved. Applications can be completed online in just several minutes, with funding that can occur within one to four business days.
Bluevine: Best Small Business Line of Credit
Rates & Terms | |
Estimated APR | 6.2% to 78% |
Loan Amount | $6,000 to $250,000 |
Minimum Down Payment | None |
Repayment Term | Up to 12 months |
Repayment Method | Weekly and monthly |
Funding Speed | As fast as 24 hours after applying |
Loan Type | Small business line of credit |
Qualifications | |
Credit Score | 625 |
Time in Business | 24 months |
Annual Revenue | $480,000 |
With Bluevine, which tops our list of the best small business lines of credit, you can get a small business line of credit that allows you to get funds on an as-needed basis. This can help cover things like unexpected emergencies or temporary shortages of cash flow.
This provider offers loan amounts up to $250,000. Rates start at 6.2% for well-qualified businesses, with weekly payments of up to 12 months. Businesses must have a minimum credit score of 625, two years’ time in business, and $40,000 in monthly revenue to be eligible for financing.
One thing to note is that if you do not want to make weekly payments, you do have the option to make monthly payments if you meet additional requirements. You must have a higher credit score of 650, monthly revenue of $80,000, three years’ time in business, and no bankruptcies within the past three years.
Loans are available in most states. Exceptions to this include North Dakota, South Dakota, Nevada, Puerto Rico, and the United States territories. To apply, you can visit the Bluevine website and get a decision in as fast as 5 minutes.
How We Chose the Best Hotel Financing Companies
Here are the following factors we considered in selecting the best hotel financing providers:
- Interest rates and estimated APR
- Loan terms such as loan amount and repayment period
- Qualification requirements such as time in business, credit score, and revenue
- Funding speed
- Industries served
- Types of loans offered
- Customer reviews and ratings
Alternatives to Hotel Loans
Since funding a hotel can be a complex process involving different categories of expenses, you may need to consider multiple types of loans to find one best suited for those costs. We’ve presented options above for several loan types, including SBA loans, hard money loans, equipment loans, bridge loans, and a small business line of credit.
If you’re having trouble getting approved or want to explore rates and terms available for other loans, here are some alternatives you can consider:
- Rollover for business startups (ROBS): A ROBS is not a loan, so this is a good option if you don’t want to pay interest fees. It allows you to access your retirement accounts tax- and penalty-free for business purposes. You can read our guide on how a ROBS works to learn more about whether it could be right for you.
- Personal loan for business purposes: If you don’t need a large amount of funding, a personal loan could give you a more competitive rate than a business loan. See our recommendations for the best personal loans for business funding.
- Loans from friends or family: Compared to bank loans, you can often get a lower interest rate by borrowing money from friends and family. Head over to our article for tips on how to ask friends and family to fund your business.
Bottom Line
Each of the lenders listed above provides competitive rates and excellent customer service. Since hotel financing can be complex, our guide also includes different types of loans, so you should be able to find one well-suited to your needs. As always, we recommend contacting multiple lenders to ensure you’re getting the best rates possible.