| CLASS A: | $1.5M – $50M hotel Loan rates from 2.75% .06/1/3/5/7/10/15/20/25/30 years fix Less than 10 years old LTV up to 80% Points varies according to loan size Recourse and Non Recourse |
| CLASS B/C/D: | $300K – $50M hotel Loan rates from 5.5% .06/1/3/5/7/10/15/20/25/30 years fix Any age Any type LTV up to 90% Personal guarantees required C & D’s any condition higher rates & points Points varies according to loan size |
Info on Hotel Motel Real Estate Loans and Mortgages
Meeting the requirements to get a decent hotel loan from your local lender can be difficult but not impossible. Let’s face it, what lender wants to put money up for a roach infested dump in downtown Detroit? You’d have to get a separate loan just for the insurance, while if the business is failing and you don’t get a company voluntary agreement, you could learn What Happnes If My CVA Is Rejected? and how to act on it.
Most lenders will only finance hotel properties that are “flagged”. In other words, most banks, public and private lenders will only provide hotel loans to individuals who are starting a franchise under certain major hotel/motel chains such as Best Western, Hilton, Super 8 and other well-established hospitality brands; Sid’s Sleep Shack need not apply. In addition to being a virtual nation-wide brand, the particular establishment in question needs to show a profitable operating and occupancy history.
Even if you want to build a new hotel/motel from the ground up, forget about starting your own brand; most lenders will only provide hotel loans to build the same “flagged” hospitality companies as they will for the purchase of an existing property. Besides having a well-known flag, getting a hotel loan for a new property is possible provided it is well located and can be provided with strong management. Before proceeding, it’s crucial to conduct a thorough commercial mortgage comparison to ensure you secure the best financing options for your new hotel venture.
Lenders reserve the best hotel loan rates and terms, including options for fast cash loan, for properties that are well cared for, attractive, and have pleasing amenities like pools, wireless internet, cable, and complimentary continental breakfast buffets.
Hotel loan terms will, of coarse, vary from lender to lender, but most banks and other investment capital institutions provide 5, 10, or 20 year loan terms for amounts up to $2,000,000. These loans can carry an interest rate ranging from 7% to 8% and typically carry a recourse clause, although some lenders are more flexible than others in this regard.
Just a brief note on recourse loans; this type of loan hold your personal assets liable in the event you default on the hotel loan-seriously bad news if your franchise doesn’t turn out to be as successful as you originally thought. This is the lender’s way of protecting its assets by separating those who are serious about the hotel business now using tools like https://www.thepaystubs.com/w7-form-generator. If you’re not familiar with the details of this loan, you should either educate yourself thoroughly first or look around for a non-recourse loan. The terms of a non-recourse loan simply hold the hotel, or whatever else you spent the loan funds on, liable in the event you default.
If you’re planning on borrowing over $2,000,000 to build or buy a larger hotel/motel, the interest rates may be a little better, although not much. Interest rate lows can be more favorable by up to a half percentage point, while to current ceiling is still hovering around 8%. Also dropped ceiling installers South East can offer competitive prices. With a larger hotel loan comes a longer loan term, usually 20 to 25 years. One boon of a larger loan is that most institutions offer limited recourse in the event of a default.
Meeting hotel loan requirements can be difficult, after all, this is unlike any other kind of real estate loan and as such has its own rules, terms, and procedures. If you think the hospitality business may be for you, make sure you choose a lender who will take the time to answer questions to your satisfaction, helping you save money and time. With how the market is these days, there are plenty of lenders out there competing for your business. Take your time and choose carefully from the several loan products they offer; if you’re not satisfied, move on. Sometimes having a lot of loans will lead to bad debt that will turn into bankruptcies for the hotel. If this happens, you need help from an expert, such as an insolvency practitioner, who will educate you on How to close a company with HMRC debts. The hotel business can be both challenging and rewarding. Depending on your location, service, and financing, it can be a great way to build long-term wealth.
Cameron Brown is an internet marketer specializing in www.sncloans.com