Hotel and Motel Loans

Hotel loans are a unique form of business loan dedicated specifically toward purchasing or rehabilitating hotels and motels. When you are looking for a hotel or motel loan, you should consider your options based on commonly accepted borrowing principles. This means you should consider many options, carefully prepare all applications and negotiate your loans fully in order to receive the best options. 

Consider Your Options

Business loans come through both federal and private lenders. The small business administration can issue many options for affordable small business loans to encourage entrepreneurs. If you are a minority business owner, including women, then you can take advantage of unique programs. The same is true for special-purpose businesses; for example, if you are restoring a historic hotel, you may find a more affordable loan.

You should also look to private lenders for small business loan options. You may be able to find a more flexible loan through a private lender than through a federal loan. Remember: a good loan is more than just a low interest rate. You should consider many lenders to see how your loan options can change your ultimate expenses and terms.

Carefully Prepare Applications

When you apply for a small business loan, you are evaluated on more than your financial strength alone. Lenders will also consider the viability of your new business endeavor to determine if you should receive financing. First, when you are providing financial information, you need to decide whether to provide your personal information or that of your business. If your business is brand new, you will not have much of a choice. However, if you are expanding a current hotel or motel business, the business should be able to stand on its own feet on a loan.

The second part of your business application should be financial projections for your business. You will need to show why your business has a good chance of succeeding in the area you have elected to open it. Factors include: market demand, experience in the industry, money from investors and your overall business model, to name a few. When you apply for any loan, you should carefully prepare the documents so you are not disqualified based on missing information or incorrectly prepared forms.

Negotiate Loan Terms

Even if you are fairly sure which lender you will choose for your motel loan, you should still negotiate your loan with that lender. Remembering you have options when you elect a lender is important. The lender cannot simply dictate terms to you. Instead, you hae the ability to proactively seek the terms you want. Opting to use collateral, for example, can often lower an interest rate. Providing a large or small down payment can further alter the ultimate cost of your loan.

When you are negotiating with a lender, choose some issues you will compromise on and some you will not. This gives you room to provide concessions to the lender while holding on to those points you care most about. There are usually options to change your terms in one area if you are willing to compromise in another.