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Hotel Financing: Best Loan Options and How to Qualify

By Randa Kriss
Last updated on October 8, 2024
Edited by Sally Lauckner
Fact checked and reviewed
Hotel financing is available from banks, SBA lenders and alternative lenders, as well as direct hotel lenders.

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You can get hotel financing from a variety of sources, including lenders that specialize in lodging and hospitality. Hotel loans can be used for working capital, to buy or renovate an existing hotel, to build a new hotel or to purchase equipment, furniture and supplies.
The best hotel financing will be the most affordable small-business loan you can qualify for that meets your needs.

How much do you need?

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We’ll start with a brief questionnaire to better understand the unique needs of your business.

Once we uncover your personalized matches, our team will consult you on the process moving forward.

Here are 5 of the best hotel financing options

LenderNerdWallet RatingMax loan amountMin. credit scoreNext steps

Here are 5 of the best hotel financing options

Best for purchasing a hotel

U.S. Small Business Administration

Max Amount

$5,000,000

Min. Credit Score

680

Best for buying hotel equipment

Triton Capital

Max Amount

$250,000

Min. Credit Score

575

Best for working capital needs

Bluevine

Max Amount

$250,000

Min. Credit Score

625

Best for hotel renovation or improvement

U.S. Small Business Administration

Max Amount

$5,000,000

Min. Credit Score

650

Best for bridge financing

OnDeck

Max Amount

$250,000

Min. Credit Score

625

I'M INTERESTED IN:

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

Read Review
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

  • 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%

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

4.0
NerdWallet rating 

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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 
4.0/5
Max loan amount
$250,000
Min. credit score
575
Est. APR
6.50-34.99%

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

Read Review

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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.
  • Not available in North Dakota, South Dakota or Nevada.
  • Rates can be high compared with traditional lenders.
May fund quickly

Bluevine - Line of credit

NerdWallet rating 
5.0/5
Max loan amount
$250,000
Min. credit score
625
Est. APR
20.00-50.00%
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

Read Review

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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

  • 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%
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

Read Review

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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.
  • Charges origination fee.
May fund quickly

OnDeck - Online term loan

NerdWallet rating 
4.9/5
Max loan amount
$250,000
Min. credit score
625
Est. APR
27.20-99.90%
May fund quickly

How Much Do You Need?

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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:

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.

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.

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

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.

Wondering if you qualify?

It’s possible to get a business loan even if you have bad credit. Bad-credit business loans are available from alternative sources, like online or nonprofit lenders.

See Your Loan Options