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  • GHC Funding

Best Hotel Loans to Refinance in 2024

Updated: Dec 22, 2023

GHC Funding: Your Premier Choice for Hotel Financing Solutions


Updated: December 21, 2023


Get current hotel loan rates.


Many hotel loans mature in 2024. Are you seeking the best hotel financing options?


Sba 7a hotel loan 100%

Hotel loans structured as commercial mortgage-backed securities (CMBS) often offer borrowers the possibility to extend the loan tenure beyond the specified due date by an additional one or two years.


In response to the sudden surge in interest rates observed last year, numerous borrowers holding loans slated for maturity in 2022 opted for extensions if the provision was available to them.

 

As per CoStar Risk Analytics, an estimated $23 billion worth of hotel CMBS loans, scheduled to mature before 2023, remained outstanding as of December 2022.


Among these loans, approximately 79% were deferred to 2023, while 11% had either been transferred to a special servicer or were slated for full repayment by the conclusion of 2022. The remaining loan agreements were extended to dates beyond 2024.


Notably, a significant majority (around 80%) of the loans extended into 2023 initially had due dates set in 2020 and 2021 and are currently undergoing resolution processes.


 

GHC Funding offers a diverse array of financing solutions tailored to the hospitality sector, ensuring support for various requirements like renovating existing hotels, purchasing equipment, or even establishing new accommodations.



Why Choose GHC Funding?


1. Competitive Rates and Terms: GHC Funding provides the most cost-effective small-business loans that suit your needs, ensuring competitive rates and flexible terms.


2. FAST Access to Capital: Compared to traditional lenders, GHC Funding ensures rapid access to funds, making it an ideal choice for those requiring immediate financial support for their hotel projects.


3. Industry-Specific Expertise: Specializing in the hospitality sector, GHC Funding offers a comprehensive range of hotel loans, leveraging industry expertise to guide you through your project's lifecycle.


 

Explore Options with GHC Funding:


1. GHC Funding is offering a variety of financing options including commercial real estate financing up to $1 million, SBA 7(a) and CDC/504 loans, catering to various hotel financing needs.


2. GHC Funding provides SBA loans, providing funding for hotel acquisitions, purchases, and construction, ensuring a streamlined funding process and additional options such as equipment financing and working capital loans.


3. GHC Funding provides fast business loans tailored for hospitality companies, and for equipment financing up to $500,000, ensuring swift approval and access to funds.


4. GHC Funding ensures access to specialized financing options for larger projects with customized loan structures, acquisitions, and refinancing solutions.


Refinance hotel loan sba 7a 100%

Qualifying for GHC Funding:

Similar to other small-business lenders, GHC Funding considers factors like personal credit score, time in business, and annual revenue. Additionally, industry-specific criteria such as cash flow, debt service coverage ratio, loan-to-value ratio, net operating income, and branding are evaluated for hotel financing.


Make GHC Funding Your Ideal Choice:

GHC Funding stands out for its diverse financing options, swift access to capital, and industry expertise. Contact GHC Funding today to explore tailored financing options and secure the ideal loan for your hotel venture.


 

What Are My Options for a Hotel Loan to Refinance?


Glad you asked....



SBA hotel lending options encompass various purposes for hotels and motels, including:


- Acquiring an existing hotel or motel

- Hotel construction, reconstruction, or renovation

- Refinancing for expansion or renovations

- Financing Property Improvement Plans (PIP)


Refinance hotel loan 7a 100%

The recent adjustments in SBA guidelines have altered the cash down payment requirements for different transactions, allowing lenders to extend 100% financing, even in certain hotel financing scenarios where it wasn't feasible earlier.


While there's yet to be observed any instances of lenders providing 100% financing for hotel construction loans, it remains a possibility, particularly when borrowers have other properties they can use as collateral in place of a down payment.


Practically, most lenders generally do not consider or allow this approach, although a handful might entertain such arrangements.


Presently, the lenders open to offering 100% financing usually offer higher rates, typically in the range of Prime plus 2% or 3%, catering to exceptionally strong borrowers with considerable liquidity, extensive hands-on experience, and stellar credit profiles. However, this landscape might evolve over time as more lenders adapt to the new regulations.


Under specific circumstances, 100% hotel financing might be particularly suitable, especially if you're purchasing a property with significant potential for appreciation within a short time frame.


The SBA 7a, for example, can serve as an ideal fit, allowing you to refinance the loan after 3 years with no penalty or after 2 years with a nominal 1% penalty, effectively making it function like a bridge loan, enabling you to preserve your capital and gain control of the property.


The situation continues to evolve as lenders navigate these new lending parameters. For the most recent updates, it's advisable to reach out to us directly.


SBA 7a and SBA 504: Key Differences

There are two primary SBA Hotel Loan types:



Notably, SBA hotel lenders tend to process more 7a loans than 504, and there are distinct reasons for this preference:


- The 7a provision now permits 100% financing.*

- It's a more lucrative option for lenders.

- Lenders receive a higher SBA "guarantee" for a substantial part of the loan.

- Most actively involved SBA hotel lenders can approve it in-house, eliminating the need to send it to SBA.



The primary advantages of the 7a include:

- Lower down payment requirements, sometimes as low as 10%.

- Lenders show more flexibility in underwriting, considering factors like experience, cash flow, credit quality, property quality, etc.

- Early refinancing options with minimal penalties.

- Applicability for various business needs, such as property improvements, working capital, debt consolidation, etc.

- Fully amortized over 25 years without balloon payments.


The 7a program is often more suitable for certain borrower profiles, including those new to hotel ownership, individuals with past credit challenges, limited experience, properties not affiliated with franchises, and those not planning long-term property ownership.


Drawbacks of the 7a program:

- Usually offers a floating interest rate, although some lenders provide 3- or 5-year fixed rates for robust transactions.

- Typically capped at a maximum loan amount of $5 million.


Benefits of SBA 504 Hotel Loans:

The SBA 504 is generally a preferred choice for most hotel loans, especially for experienced hoteliers or larger construction projects. However, qualification can be more challenging based on individual circumstances.

Primary advantages of the 504 include:


- Fixed-rate mortgages for both the first and second loans, with the first mortgage fixed for a minimum of 5 years and the second for 25 years.

- Potential for a 30-year amortization on the first mortgage.

- Possibility of a 15% down payment when expanding an existing business with similar ownership and entity.


Understanding these distinct SBA programs enables borrowers to make informed decisions based on their specific hotel financing needs and financial standing.

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