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Hotel Financing Rates

GHC Funding: Unlocking Your Hotel Financing Rates.

Last updated 12/15/2023

A hotel property, a haven for short-term paid lodging, has evolved significantly from its historical roots of basic accommodations. Modern rooms now boast en-suite bathrooms, climate control, and various amenities like televisions, internet access, and mini-bars. Larger hotels augment their offerings with restaurants, pools, childcare, and event services, occasionally bundling meals with room packages.


At GHC Funding, we navigate various loan types tailored for hotels, each with distinct minimum amounts, Loan-to-Value ratios (LTVs), term lengths, amortization schedules, and interest rates.

- Conventional Loans: Starting at $1,000,000 with an LTV of 75% and rates between 5.87% - 10.50%.

- Conduit/CMBS Loans: Commencing at $2,000,000, boasting a 75% LTV, and rates ranging from 5.88% - 7.49%.

- Insurance Loans: Offered from $5,000,000 with a 70% LTV, featuring rates between 5.38% - 7.89%.

- USDA Loans: Available from $1,000,000, offering an 85% LTV, and rates spanning 6.50% - 11.50%.

- SBA Loans: Starting at $1,000,000, offering an 85-90% LTV, and rates varying from 6.59% - 7.24%.


Types of Hotel Loans:

1. Conventional: Suited for smaller hotels, generally offered by banks or credit unions, with terms up to 10 years.

2. Conduit/CMBS: Ideal for large flagged hotels or resorts, backed by commercial or investment banks, offering fixed rates and flexible underwriting.

3. Insurance: Catering to well-established, low-leverage hospitality properties in primary markets.

4. USDA: Tailored for rural area hotels, fostering local community benefits through job creation and other positive impacts.

5. SBA: Government-backed loans facilitating purchase, renovation, construction, or limited refinancing of hospitality properties.


Understanding Net Operating Income, Debt Service Coverage Ratio (DSCR), Revenue per Available Room (RevPar), and Average Daily Rate (ADR) is crucial for financing approval. Non-recourse loans impose different criteria compared to recourse loans in terms of minimum amounts, LTVs, DSCR, and amortization periods.

Preparing Your Financial Package:

For non-recourse mortgages, three years of operating statements, recent STR reports, franchise agreements, property websites, and offering memorandums (if purchasing) are essential. Recourse mortgages require business and personal tax returns, balance sheets, STR reports, personal financial statements, and hospitality resumes.


Hotel Financing FAQs:

1. Owner-occupied or investment properties: SBA views hotels as owner-occupied; other lenders consider them investment properties.

2. Current interest rates: Vary based on property specifics, LTV, DSCR, and borrower's financial strength.

3. Refinancing SBA loans: Usually restricted, but exceptions might apply under specific SBA conditions.

4. SBA 504 prepayment penalty: Calculated using a percentage-based method outlined in GHC Funding's calculator.

5. Maximum loan to value: Ranges between 60 to 80 percent based on loan types.

6. Flagged vs. unflagged hotels: Flagged properties operate under franchise groups; unflagged are independent.

7. Maximum SBA guarantee: Up to $2 million for SBA 7(a) loans; $5 million for SBA 504 loans.


For detailed information on SBA loans, underwriting standards, and eligible uses, connect with GHC Funding. Our specialized offerings cater to diverse hotel financing needs. Unlock your hotel financing potential today with GHC Funding!

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