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Here are 5 of the best hotel financing options
| Lender | NerdWallet Rating▼ | Max loan amount▼ | Min. credit score▼ | Next steps |
|---|---|---|---|---|
SBA CDC/504 loan | Best for purchasing a hotel | $5,000,000 | 680 | Read Review |
Triton Capital - Equipment financing with Fundera by NerdWallet | 4.1/5 Best for buying hotel equipment | $250,000 | 575 | with Fundera by NerdWallet |
Bluevine - Line of credit with Fundera by NerdWallet | 5.0/5 Best for working capital needs | $250,000 | 625 | with Fundera by NerdWallet |
SBA 7(a) loan with Fundera by NerdWallet | Best for hotel renovation or improvement | $5,000,000 | 650 | with Fundera by NerdWallet |
OnDeck - Online term loan with Fundera by NerdWallet | 4.7/5 Best for bridge financing | $250,000 | 625 | with Fundera by NerdWallet |
Here are 5 of the best hotel financing options
Best for purchasing a hotel
Best for buying hotel equipment
Best for working capital needs
Best for hotel renovation or improvement
Best for bridge financing
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Our pick for
purchasing a hotel
SBA 504 loans are designed specifically for the purchase of land and real estate — making them a good option for buying a hotel. In fact, 17.2% of SBA 504 loans awarded in fiscal year 2024 were issued to businesses in the accommodation industry.
SBA CDC/504 loan
Max loan amount
$5,000,000
Min. credit score
680
Est. APR
5.00-7.00%
Pros
- Low down payment required.
- Repayment terms of up to 25 years.
- Competitive interest rates.
Cons
- Personal guarantee is required.
- Must meet job creation or public policy goals to qualify.
- Longer processing times than online lenders.
SBA CDC/504 loan
Max loan amount
$5,000,000
Min. credit score
680
Est. APR
5.00-7.00%
SBA 504 loans are designed specifically for the purchase of land and real estate — making them a good option for buying a hotel. In fact, 17.2% of SBA 504 loans awarded in fiscal year 2024 were issued to businesses in the accommodation industry.
SBA 504 loans are designed to promote business growth and job creation through the purchase or upgrade of major fixed assets.
Pros
- Low down payment required.
- Repayment terms of up to 25 years.
- Competitive interest rates.
Cons
- Personal guarantee is required.
- Must meet job creation or public policy goals to qualify.
- Longer processing times than online lenders.
Qualifications:
- Be a for-profit U.S. business.
- Net worth of less than $15 million.
- Average net income of less than $5 million for the two years prior to your application.
- Financial qualifications determined by individual lender.
Our pick for
buying hotel equipment
If you need to purchase ice machines, washers, bedroom sets, televisions or other related supplies for your hotel, consider dedicated equipment financing. Triton Capital can offer loans up to $250,000.
Triton Capital - Equipment financing
4.1
NerdWallet rating with Fundera by NerdWallet
Max loan amount
$250,000
Min. credit score
575
Est. APR
6.50-34.99%
Pros
- Can fund within one to two business days.
- No prepayment penalty.
- Flexible repayment options: monthly, quarterly, annually or semiannually.
Cons
- Charges an origination fee.
Triton Capital - Equipment financing
NerdWallet rating
4.1/5
Max loan amount
$250,000
Min. credit score
575
Est. APR
6.50-34.99%
If you need to purchase ice machines, washers, bedroom sets, televisions or other related supplies for your hotel, consider dedicated equipment financing. Triton Capital can offer loans up to $250,000.
Triton Capital offers fast equipment loans up to $250,000 for businesses in a range of industries.
Pros
- Can fund within one to two business days.
- No prepayment penalty.
- Flexible repayment options: monthly, quarterly, annually or semiannually.
Cons
- Charges an origination fee.
Qualifications:
- Minimum credit score: 580.
- Minimum time in business: Two years.
- Minimum annual revenue: $150,000.
Our pick for
working capital needs
A Bluevine line of credit can help you cover day-to-day expenses for your hotel, such as inventory purchases, payroll and utilities. You can draw from your credit line as needed and when you make repayments, the line automatically replenishes.
Bluevine - Line of credit
Max loan amount
$250,000
Min. credit score
625
Est. APR
20.00-50.00%
Pros
- Cash can be available within 12 to 24 hours.
- Can be used to build business credit.
- Low minimum credit score requirement.
Cons
- Requires weekly payments.
- Requires personal guarantee.
- Not available in North Dakota, South Dakota or Nevada.
- Rates can be high compared to traditional lenders.
May fund quickly
Bluevine - Line of credit
Max loan amount
$250,000
Min. credit score
625
Est. APR
20.00-50.00%
A Bluevine line of credit can help you cover day-to-day expenses for your hotel, such as inventory purchases, payroll and utilities. You can draw from your credit line as needed and when you make repayments, the line automatically replenishes.
Bluevine's 26-week line of credit provides fast working capital for short-term borrowing needs.
Pros
- Cash can be available within 12 to 24 hours.
- Can be used to build business credit.
- Low minimum credit score requirement.
Cons
- Requires weekly payments.
- Requires personal guarantee.
- Not available in North Dakota, South Dakota or Nevada.
- Rates can be high compared to traditional lenders.
Qualifications:
- Minimum credit score: 625.
- Minimum time in business: 12 months.
- Minimum annual revenue: $120,000.
- No bankruptcies in the past year.
May fund quickly
Our pick for
hotel renovation or improvement
If you need to finance the different elements of an improvement or renovation project, consider an SBA 7(a) loan. These loans can be used for multiple purposes and offer large loan amounts.
SBA 7(a) loan
Max loan amount
$5,000,000
Min. credit score
650
Est. APR
10.75-14.25%
Pros
- Large borrowing maximums.
- Interest rates are capped.
- Long repayment terms available.
Cons
- Personal guarantee is required.
- Collateral is typically required.
- Longer processing times than online lenders.
Low interest rate
SBA 7(a) loan
Max loan amount
$5,000,000
Min. credit score
650
Est. APR
10.75-14.25%
If you need to finance the different elements of an improvement or renovation project, consider an SBA 7(a) loan. These loans can be used for multiple purposes and offer large loan amounts.
7(a) loans are issued by private lenders and backed by the SBA. They offer long repayment terms and low interest rates.
Pros
- Large borrowing maximums.
- Interest rates are capped.
- Long repayment terms available.
Cons
- Personal guarantee is required.
- Collateral is typically required.
- Longer processing times than online lenders.
Qualifications:
- For-profit U.S. business.
- Unable to access credit on reasonable terms from nongovernment sources.
- Financial qualifications determined by individual lender.
Low interest rate
Our pick for
bridge financing
OnDeck’s short-term loan can help you cover immediate financing needs for your hotel. With repayment terms up to 24 months, you may also use this loan to bridge the gap until you can access longer-term funding.
OnDeck - Online term loan
Max loan amount
$250,000
Min. credit score
625
Est. APR
27.20-99.90%
Pros
- Cash can be available within the same business day (does not apply in California or Vermont).
- Accepts borrowers with a minimum credit score of 625.
- Streamlined application process with minimal documentation required.
- Can be used to build business credit.
Cons
- Cannot fund North Dakota-based businesses.
- Requires frequent (daily or weekly) repayments.
- Interest rates can be high compared with traditional lenders.
- Requires business lien and personal guarantee.
May fund quickly
OnDeck - Online term loan
Max loan amount
$250,000
Min. credit score
625
Est. APR
27.20-99.90%
OnDeck’s short-term loan can help you cover immediate financing needs for your hotel. With repayment terms up to 24 months, you may also use this loan to bridge the gap until you can access longer-term funding.
OnDeck offers a fast term loan for small-business owners with less-than-stellar credit who want to expand.
Pros
- Cash can be available within the same business day (does not apply in California or Vermont).
- Accepts borrowers with a minimum credit score of 625.
- Streamlined application process with minimal documentation required.
- Can be used to build business credit.
Cons
- Cannot fund North Dakota-based businesses.
- Requires frequent (daily or weekly) repayments.
- Interest rates can be high compared with traditional lenders.
- Requires business lien and personal guarantee.
Qualifications:
- Minimum credit score: 625.
- Minimum time in business: One year.
- Minimum annual revenue: $100,000.
- Must have business bank account.
May fund quickly
What is hotel financing?
Hotel financing refers to loans that are designed to help businesses in the hospitality industry. These loans can provide funding for hotels, motels, resorts and bed-and-breakfasts, among other accommodation properties.
You can use a hotel loan to:
- Purchase a hotel.
- Build a new hotel.
- Renovate or improve your property.
- Refinance an existing hotel loan.
- Cover day-to-day expenses.
- Purchase hotel equipment and machinery.
- Hire staff.
- Fund marketing or advertising campaigns.
Where to get hotel financing
Bank and SBA lenders
Banks and SBA lenders — which are typically banks and credit unions themselves — usually offer low interest rates, long repayment terms and large business loan amounts.
To qualify, however, you’ll generally need a strong credit history, solid financials and multiple years in business. You may need to provide collateral to secure your loan. SBA and business bank loans also have a lengthy application process and can be slow to fund.
Still, businesses with strong credentials may want to consider these lenders to get hotel financing with the most competitive rates and terms.
Here are two lenders you might consider:
Bank of America offers commercial real estate financing starting at $25,000 that can be used for purchasing property or refinancing an existing loan. These loans are available with terms up to 15 years and interest rates starting as low as 5.5%
Bank of America business loans also include both SBA 7(a) and CDC/504 loans. You can get a 7(a) loan up to $5 million, with terms up to 25 years for commercial real estate and up to 10 years for all other purposes. For 504/CDC loans, you can get a loan of $400,000 or more. Repayment terms are up to 25 years for commercial real estate and up to 10 years for machinery or equipment.
Celtic Bank is a digital bank that focuses on small-business financing and SBA loans. It is one of the largest processors of SBA 7(a) loans in the country — approving nearly $2 billion in loan volume for the 2024 fiscal year.
In addition to 7(a) loans, Celtic Bank offers SBA CDC/504 loans and, according to its website, has over 20 years of experience funding hotel acquisitions, purchases and construction.
Celtic is also an SBA Preferred Lender, which helps expedite the funding process. Unlike many SBA lenders, the bank allows you to start and manage your application online. Depending on your loan type and business credentials, you could qualify in as little as 10 minutes and once approved, receive your funds within 48 hours.
Plus, Celtic Bank offers more than just SBA financing. You can explore other hotel loan options, including equipment financing, construction financing and working capital loans.
Alternative lenders
Compared to banks and SBA lenders, alternative lenders usually provide quick funding, with streamlined online applications. These lenders may have looser qualification requirements, but they also tend to offer smaller loan amounts, shorter repayment terms and charge higher interest rates for financing.
If you need a hotel loan fast, you might consider these lenders.
Triton Capital is an online lender that specializes in equipment financing, offering loans of up to $250,000. Hotel financing from Triton Capital can be used for equipment such as fixtures, beds, furniture, chairs, ice machines, security systems, smart appliances, room service tables or luggage carts.
You can apply for a loan online and receive approval within two to four hours. If you’re approved, you can access funds within one to two days after signing your loan agreement.
To qualify for equipment financing from Triton, you’ll need at least
24
months in business, a minimum credit score of 575
or higher and at least $250,000 in annual revenue.Bluevine offers a business line of credit of up to $250,000. This line of credit allows you to draw funds as needed and make payments on a fixed schedule. As you repay, your credit line replenishes automatically. Because of this structure, the Bluevine line of credit can be a good option to cover your hotel’s ongoing working capital needs.
You can apply for a line of credit online and receive approval in as fast as five minutes. After approval, you can make a draw from your line and get funds in as little as 24 hours.
To qualify for a Bluevine line of credit, you must have at least
12
months in business, $120,000 in annual revenue and a credit score of 625
or higher.OnDeck’s short-term loan is available in amounts up to $250,000. Repayment terms are available for up to 24 months. This short-term business loan can be useful for covering immediate financing needs for your hotel. It can also be a good option for bridge financing.
Bridge financing is a short-term business loan that you use to cover expenses while you wait for longer-term financing. If you need to pay for project expenses while you’re in the process of getting an SBA loan, for example, this financing may help.
You can apply for an OnDeck loan in minutes and once approved, receive funds as soon as the same day. To qualify, you’ll need at least
12
months in business, annual revenue of $100,000 and a credit score of 625
or higher.ARF Financial is an alternative lender that provides fast business loans to hospitality companies, including hotels, motels and bed-and-breakfasts. You can use a hotel loan from ARF for a range of purposes, including opening a new location, renovating or remodeling, expanding your services or offerings, and marketing or advertising your business.
Hotel financing is available in amounts up to $750,000 with terms up to 36 months. You can complete and submit the online application in about 10 minutes, and if approved, you can get access to funds in as little as three business days.
To qualify for a loan from ARF Financial, you’ll need a minimum annual revenue of $100,000 and at least one month in business. ARF does not require a minimum credit score, but its website states the lender considers a variety of criteria, including but not limited to your credit history, when making an underwriting decision.
Direct hotel lenders
Direct hotel lenders lend their own money to business owners looking for funding. These companies specialize in the hotel and hospitality industry and offer their expertise in addition to the opportunity to access capital.
You might consider a direct hotel lender if you’re trying to finance a large project and could benefit from an expert working with you from beginning to end. Not all of these companies provide details about interest rates and qualification requirements on their websites, however, so you’ll want to be sure to clarify that information before proceeding.
Avana Capital has been in business since 2002, offering specialized financing options for hospitality businesses, renewable energy companies and owner-occupied real estate projects.
Avana offers commercial construction loans, SBA 504 loans, bridge loans, as well as conventional loans. Lending specialists can use their expertise in the industry to help you choose the right financing option and customize a loan offer that works with your needs.
If you need a bridge loan, for example, Avana offers interest-only payments for 12 to 36 months, closings within 10 to 30 days and pre-approval in as little as three days. The lender will also finance up to 75% of the as-complete value (the estimated value post-renovation) of the project.
Access Point Financial (APF) is a direct hospitality lender that offers several types of hotel loans, including permanent loans, commercial bridge loans, construction loans, preferred equity loans and mezzanine loans, which consist of a combination of equity and debt.
Because APF only issues hotel loans, it can offer unique financing solutions and a streamlined loan process. This lender also assigns each funded borrower with an asset manager who will work with you throughout the loan lifecycle.
Keep in mind that APF focuses on large hotel investments — the lowest minimum loan amount available is $1 million for branded hotel property improvement plans. For all other hotel loans, the lowest minimum amount available is either $5 or $10 million.
How to qualify for hotel financing
Like any small-business lender, hotel lenders will generally consider similar factors — your personal credit score, time in business and annual revenue — when evaluating your loan application.
When applying for hotel financing, however, lenders will likely also consider criteria that are specific to the hotel industry, such as:
- Cash flow. Cash flow is the amount of money you have entering your business, minus the amount of money you have leaving your business at a specific moment in time. Positive cash flow can show that your business is financially healthy and able to pay back any potential debt.
- Debt service coverage ratio. The debt service coverage ratio (DSCR) compares your business’s cash flow to its potential debt obligations. To calculate DSCR, you’ll need to divide your annual net operating income by the potential annual debt payments you’d make for the hotel loan in question. Some lenders require a DSCR of 1.25 — a higher ratio is better — it means you have enough money coming in to pay your existing debts.
- Loan-to-value ratio. If you’re looking for a hotel loan to finance a purchase or construction project, the lender will calculate the loan-to-value ratio (LTV). This ratio is calculated by dividing the loan amount by the value of the property you are looking to buy or renovate. Commercial real estate lenders will typically offer loan amounts with LTVs that range from 65% to 85%, depending on the type of property and your business’s qualifications, among other criteria.
- Net operating income. Net operating income is your hotel revenue minus all necessary operating expenses. This number is calculated pre-tax and doesn’t account for any debt payments, capital expenditures or depreciation. Hotel lenders will use your net operating income to determine how efficiently your business runs.
- Revenue per available room. Revenue per available room, or RevPAR, is calculated by dividing the total room revenue by the rooms available. It can also be calculated by multiplying the average daily rate by the occupancy rate. In either case, this number represents the revenue generated per available room, whether or not they are occupied. Lenders may use this industry-specific metric to evaluate the success and growth of your hotel.
- Debt yield. Debt yield is your hotel’s net operating income divided by the potential loan amount. This number indicates the return a lender would see if they were to have to foreclose on your hotel from day one. Debt yield helps lenders assess the risk of issuing a loan to your business.
- Branding. Hotel lenders may consider the name of your hotel as they underwrite your loan application. If you’re operating under a well-established brand, the company’s reputation may make it easier for you to qualify for financing. Although small or boutique hotels may not benefit from brand reputation, those businesses can look for lenders that specialize in their part of the industry instead of those that typically work with larger brands.
Frequently asked questions
Hotels can be financed with bank loans, SBA loans, commercial real estate loans, equipment loans, bridge loans or hard money loans. You can get these types of financing from traditional and alternative lenders.
Down payments with hotel loans typically range from 10% to 30% but can vary based on factors including how you plan to use the funds, the loan amount and your business’s qualifications. Learn more about how much of a down payment you might need for a business loan.
Term lengths for hotel loans typically vary based on how you’re using the financing. Large projects, like buying or renovating a hotel, can have terms that range from three to 10 years, with amortization up to 30 years. Working capital loans, on the other hand, tend to have slightly shorter terms, ranging from one to five years.
A version of this article originally appeared on Fundera, a subsidiary of NerdWallet.
Last updated on October 8, 2024
Methodology
NerdWallet’s review process evaluates and rates small-business loan products from traditional banks and online lenders. We collect over 30 data points on each lender using company websites and public documents. We may also go through a lender’s initial application flow and reach out to company representatives. NerdWallet writers and editors conduct a full fact check and update annually, but also make updates throughout the year as necessary.
Our star ratings award points to lenders that offer small-business friendly features, including:
- Transparency of rates and terms.
- Flexible payment options.
- Fast funding times.
- Accessible customer service.
- Reporting of payments to business credit bureaus.
- Responsible lending practices.
We weigh these factors based on our assessment of which are the most important to small-business owners and how meaningfully they impact borrowers’ experiences.
NerdWallet does not receive compensation for our star ratings. Read more about our ratings methodology for small-business loans and our editorial guidelines.
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