Hotel Financing: Best Loan Options and How to Qualify
Hotel financing is available from banks, SBA lenders and alternative lenders, as well as direct hotel lenders.
| Lender | NerdWallet rating | Best For | Max loan amount | Min. time in business | Min. interest rate | Term length | Learn more |
|---|---|---|---|---|---|---|---|
 | Read expert review | purchasing a hotel | $5,000,000 | 24 months | 5% | 10 to 25 years | |
 with Fundera by NerdWallet | Read expert review | buying hotel equipment | $250,000 | 24 months | 6.5% | 12 months to 5 years | with Fundera by NerdWallet |
 with Fundera by NerdWallet | Read expert review | working capital needs | $250,000 | 12 months | 14% | Up to 6 months | with Fundera by NerdWallet |
with Fundera by NerdWallet | Read expert review | hotel renovation or improvement | $5,000,000 | 24 months | 10% | Up to 25 years | with Fundera by NerdWallet |
 with Fundera by NerdWallet | Read expert review | bridge financing | $250,000 | 12 months | 31.3% | 18 to 24 months | with Fundera by NerdWallet |
best hotel financing options: More details
U.S. Small Business Administration: Best 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
Term length
10 to 25 years
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.
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.
Triton Capital: Best 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
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Max loan amount
$250,000
Min. credit score
580
Term length
12 months to 5 years
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.
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.
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Bluevine: Best 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.
May fund quickly
Bluevine - Line of credit
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Max loan amount
$250,000
Min. credit score
625
Term length
Up to 6 months
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.
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.
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U.S. Small Business Administration: Best 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.
Low interest rate
SBA 7(a) loan
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Max loan amount
$5,000,000
Min. credit score
650
Term length
Up to 25 years
Pros
- Large borrowing maximums.
- Interest rates are capped.
- Long repayment terms available.
Cons
- Collateral is typically required.
- Longer processing times than online lenders.
Pros
- Large borrowing maximums.
- Interest rates are capped.
- Long repayment terms available.
Cons
- Collateral is typically required.
- Longer processing times than online lenders.
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OnDeck: Best 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.
May fund quickly
OnDeck - Online term loan
with Fundera by NerdWallet
Max loan amount
$250,000
Min. credit score
625
Term length
18 to 24 months
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.
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.
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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
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
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
Celtic Bank
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
Bluevine
OnDeck
ARF Financial
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
Avana Capital
Access Point Financial
How to qualify for hotel financing
Like any small-business lender,
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 - Debt service coverage ratio. The
debt service coverage ratio - 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 - 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
How are hotels financed?
How much do you have to put down on a hotel?
How long is a loan for a hotel?
A version of this article originally appeared on Fundera, a subsidiary of NerdWallet.
Last updated on October 8, 2024
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