The best hotel financing options will have a combination of low rates, flexible loan terms, easy qualification requirements, and excellent customer service. Funds from the best hotel loans can be used to cover different types of expenses. Some examples of this can include the purchase or renovation of a building, expenses associated with acquiring business equipment for the hotel, and other operational costs.
We’ve selected different types of loans depending on your intended use of the loan proceeds. This includes Small Business Administration (SBA) loans, commercial real estate (CRE) loans, hard money loans, business lines of credit, and equipment financing.
Here are our picks for the nine best hotel financing options:
- Lendio: Best overall for multiple financing options
- U.S. Bank: Best conventional lender for commercial loans
- Clarify Capital: Best broker for SBA loans with low credit score requirements
- TMC Financing: Best for large loans and expertise in SBA 504 hotel funding
- Kiavi: Best for small short-term financing needs
- Avana Capital: Best commercial bridge loan for hotels
- Smarter Finance USA: Best for equipment financing
- Creditfy: Best flexible terms for a line of credit
- Bluevine: Best line of credit for short-term financing needs
Best Hotel Financing Options At a Glance
Loan Type | Estimated Starting Annual Percentage Rate (APR) | Maximum Loan Amount | Maximum Loan Term | Time in Business Required | Credit Score Required | |
---|---|---|---|---|---|---|
SBA/CRE | 6.25% to 11.5% | $5 million | 25 years | 2 years | 600 | |
SBA/CRE | 6.99% | $12.375 million | 25 years | 2 years | 700 | |
SBA 7(a) | 5.75% | $5 million | 25 years | 6 months | 500 | |
SBA 504 | 7.125% | No stated maximum | 25 years | 2 years | Not stated | |
Hard money | 9.25% | $2.5 million | 2 years | Not stated | 660 | |
Commercial bridge | 7% to 12% | $20 million+ | 3 years | 3 years | 680 | |
Equipment financing | 7% to 20% | $1 million | 5 years | None | None | |
Line of credit | 6.49% | $2.5 million | 3 years | 6 months | 600 | |
Line of credit | 6.2% to 78% | $250,000 | 12 months | 24 months | 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 | 6.25% to 11.5% and up |
Loan Amount | $250,000 to $5 million |
Minimum Down Payment | 10% |
Repayment Term | 5 to 25 years |
Repayment Schedule | Monthly |
Closing Costs & Fees | Varies |
Funding Speed | 30 to 90 days |
Loan Type | Commercial mortgage, SBA 504, and SBA 7(a) |
Qualifications | |
Credit Score | 600 |
Time in Business | 2 years |
Debt Service Coverage Ratio (DSCR) | 1.25x but may vary |
Annual Revenue | $96,000 |
Why We Like Lendio
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 lender 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 6.25%. 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 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.
U.S. 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 Schedule | Monthly |
Closing Costs & Fees | 2% to 4% of loan amount |
Funding Speed | 30 to 45 days (60 to 90 days for SBA loans) |
Loan Type | CRE and SBA |
Qualifications | |
Credit Score | 700 recommended but may vary |
Time in Business | 2 years recommended but can vary |
DSCR | 1.25x |
Annual Revenue | None |
Why We Like U.S. Bank
For hotel financing, we chose U.S. 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.
Clarify Capital: Best Broker for SBA Loans With Low Credit Score Requirements
Rates & Terms | |
Estimated APR | 5.75% and up |
Loan Amount | $5,000 to $5 million |
Minimum Down Payment | 10% |
Repayment Term | Up to 25 years |
Repayment Schedule | Monthly |
Closing Costs & Fees | Varies |
Funding Speed | 21 to 180 days |
Loan Type | SBA 7(a) |
Qualifications | |
Credit Score | 500 |
Time in Business | 6 months |
Debt Service Coverage Ratio (DSCR) | 1.25x but may vary |
Annual Revenue | $120,000 |
Why We Like Clarify Capital
Clarify Capital is a business loan broker with over 75 lenders in its network. While it offers a number of different types of loan programs, its SBA offering has a much lower credit score requirement than what other SBA lenders look for, making it an excellent option if you have blemishes on your credit report.
With that being said, borrowers with low credit scores may be limited in the number of financing options they’ll be eligible for. In fact, without compensating factors such as strong business cash flow or financial reserves, meeting the minimum criteria stated above may not guarantee any type of loan approval. To improve your chances of getting approved, we recommend at least a credit score of 575 for SBA microloans and 640 for all other SBA loan types.
When you work with Clarify Capital, you’ll be paired with a dedicated loan advisor. This individual’s role is to understand your business needs and qualifications so that they can match you with lenders well-suited to helping you reach your company’s goals. The tradeoff here, however, is that getting SBA funding can take upwards of six months due to the fact that Clarify Capital would have to work with outside lending institutions to complete the transaction. SBA loans also often require a significant amount of paperwork and due diligence review.
If approved, Clarify Capital states that you can get APRs as low as 5.75%. You can visit the Clarify Capital website to learn more and to apply. Submitting an initial online application to view your loan options won’t hurt your credit score and is something that can be completed in under two minutes.
TMC Financing: Best for Large Loans and Expertise in SBA 504 Hotel Funding
Rates & Terms | |
Estimated APR | 6.28% and up |
Loan Amount | No stated maximum |
Minimum Down Payment | 10% |
Repayment Term | Up to 25 years |
Repayment Schedule | 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 |
Qualifications | |
Credit Score | Not stated |
Time in Business | 2 years recommended |
DSCR | 1.25x |
Annual Revenue | Varies |
Why We Like TMC Financing
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 has no stated maximum funding amount, having previously issued loans as large as $44 million.
Rates start at around 7.125%. To be considered for hotel financing, you’ll need a down payment of at least 10%, 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.
Kiavi: Best for Small Short-term Financing Needs
Rates & Terms | |
Estimated APR | 9.25% and up |
Loan Amount | $100,000 to $3 million |
Minimum Down Payment | 5% |
LTV & ARV | 95% LTV and 80% ARV |
Repayment Term | 12, 18, or 24 months |
Repayment Method | Monthly with interest-only options |
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 recommended |
Time in Business | Not stated |
Annual Revenue | Varies |
Why We Like Kiavi
Out of the lenders 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 $2.5 million with rates as low as 9.25%. Repayment terms can be as long as 24 months, making this better suited as a short-term bridge loan. It’s recommended that you have a credit score of 660, although the provider can 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 Schedule | Monthly, interest-only available |
Closing Costs & Fees | Varies |
Funding Speed | 10 to 30 days |
Loan Type | Commercial bridge loan |
Qualifications | |
Credit Score | 680 is recommended |
Time in Business | 3 years recommended |
DSCR | 1.4x recommended |
Annual Revenue | Varies |
Why We Like Avana Capital
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.
Smarter Finance USA: Best for Equipment Financing
Rates & Terms | |
Estimated APR | 10% to 20% |
Loan Amount | $10,000 to $1 million |
Minimum Down Payment | 0% to 35% |
Repayment Term | 24 to 60 months |
Repayment Schedule | 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 is recommended |
Time in Business | None |
Annual Revenue | None |
Why We Like Smarter Finance USA
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 options 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.
Creditfy: Best Flexible Terms for a Line of Credit
Rates & Terms | |
Estimated APR | 6.49% and up |
Loan Amount | Up to $2.5 million |
Repayment Term | 6 months to 3 years |
Repayment Schedule | Monthly |
Funding Speed | As fast as 24 hours |
Loan Type | Line of credit |
Qualifications | |
Credit Score | 600 |
Time in Business | 6 months |
Annual Revenue | $100,000 |
Why We Like Creditfy
Creditfy is another business loan broker on our list that can offer some of the most flexible loan terms and rates available. In addition to a competitive APR, you can get the longest repayment term and largest loan amount for a business credit line. Additionally, Creditfy can issue funding in as little as 24 hours.
It boasts a loan approval rate of 90%, meaning that meeting the minimum requirements listed above should give you very high odds of landing an approval. However, borrowers should keep in mind that the best rates and terms will typically require strong credit and finances of excess of the minimum stated eligibility criteria.
As is the case with many other business loan brokers, working with Creditfy allows you to work with a loan specialist to guide you through the process and present you with financing options based on your company’s unique needs, goals, and qualifications. To give you the best experience, Creditfy requires all of its lending specialists to have at least two years of industry experience, and it also has exclusive partnerships with certain lenders.
To apply, you can visit the Creditfy website and complete an application in just several minutes.
Bluevine: Best Line of Credit for Short-term Financing Needs
Rates & Terms | |
Estimated APR | 6.2% to 78% |
Loan Amount | Up to $250,000 |
Repayment Term | 6 or 12 months |
Repayment Schedule | Weekly, monthly |
Funding Speed | As fast as 24 hours |
Loan Type | Line of credit |
Qualifications | |
Credit Score | 625 |
Time in Business | 24 months |
Annual Revenue | $480,000 |
Why We Like Bluevine
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.
Rates start at 6.2% for well-qualified businesses, with weekly payments of up to 12 months. Rates are calculated as a simple interest rate, with the assumption that you draw the maximum amount possible, making only the minimum required payments until paid in full. Businesses drawing less than the full amount or deciding to pay off the loan more quickly could save money on interest charges.
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 700, 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, and Nevada. Certain industries—such as gambling, political campaigns, firearms, and auto dealerships—are also ineligible for financing. You can see Bluevine’s list of ineligible industries.
To apply, you can visit the provider’s website and get a decision in as fast as 5 minutes.
How We Chose the Best Hotel Loans
We considered the following criteria when selecting the best hotel loans:
- Interest rate, fees, and estimated APRs
- Loan terms, such as repayment period and loan amount
- Qualification requirements, such as credit score, time in business, and revenue
- Funding speed
- Type of financing offered
- Industries served
- 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.
Frequently Asked Questions (FAQs)
Common types of loans that can be used to buy a hotel include SBA loans, commercial real estate loans, bridge loans, and hard money loans. Once you find a lender that offers these financing options, you should also check to see if it has any restrictions on property types.
Since a hotel loan is secured by the property itself, it can be easier to get than an unsecured loan. For example, it’s possible to get financing with bad credit, but you’ll still need to demonstrate strong finances as proof that you can afford the loan payments. Additionally, many hotel loans require a downpayment between 10% and 25%.
Hotel loans often have fees ranging from 2% to 4% of the loan amount, with interest rates that run from 6% to 12% depending on your qualifications. These figures can also vary depending on the lender and type of loan you choose.
Bottom Line
The best hotel financing options we’ve selected can provide competitive rates and excellent customer service. Since getting business loans for hotels can be a complex process, 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.