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  • GHC Funding

How to Get the Best Hotel Loan for Your Business in 2024

Updated: Dec 15, 2023




GHC Funding specializes in facilitating financial avenues for individuals seeking hotel loans and motel financing. In the realm of hospitality, hotels stand as establishments offering paid lodging on a short-term basis.


These accommodations have evolved significantly from basic setups to modern, well-equipped spaces featuring en-suite bathrooms, climate control systems, and convenient amenities like televisions, internet access, and coffee makers.


Larger hotels often boast additional facilities such as restaurants, swimming pools, childcare services, and event hosting spaces, sometimes even inclusive of meal packages.


Hotel Loan Rates:

When considering hotel loans, it's essential to understand the range of options available:


- Conventional: Ideal for smaller hotels, these loans, ranging from 3 to 10 years with amortizations up to 25 years, are offered by conventional lenders like banks, credit unions, or savings institutions.


- Conduit/CMBS: Secured by first-position mortgages, these loans are suitable for larger flagged hotels or resorts. They provide fixed interest rates and flexible underwriting criteria.


- Insurance: Offered by insurance companies, these loans cater to well-established hospitality properties in primary markets with stringent underwriting standards.


- USDA and SBA: These loans are government-backed programs catering to rural areas and small businesses, respectively, each offering various terms, interest rates, and eligibility criteria.


Hotel Lending Guidelines:

GHC Funding helps potential borrowers navigate through lending guidelines:


- Non-Recourse Loans: Starting at a minimum of $2 million with a maximum LTV of 70%, these loans usually require a minimum DSCR of 1.5x and a term length ranging from 3 to 10 years.

- Recourse Loans: Starting at $1 million, these loans can have different LTVs and term lengths, depending on the loan program.


Preparing Your Financial Package:

Before applying for a loan, ensure you have the necessary documentation, such as operating statements, financial reports, property details, and personal financial statements.


Hotel Mortgage FAQs:


GHC Funding addresses common queries:


- Owner-Occupied or Investment Properties: SBA guidelines consider hotels as owner-occupied, while other lenders view them as investment properties.


- Interest Rates: Rates vary based on several factors, including property performance and borrower's financial strength.


- Refinancing SBA Loans: While challenging, specific conditions might allow for refinancing under SBA guidelines.


- LTV and Prepayment Penalty Calculations: The maximum LTV varies across loan types, and GHC Funding provides calculators to simplify prepayment penalty calculations.


- Flagged vs. Unflagged Hotels: Flagged hotels operate under franchise agreements, while unflagged properties are independently owned and operated.


- Maximum SBA Guarantee: SBA guarantees can range up to $5 million for certain loan programs.


GHC Funding endeavors to provide comprehensive support and tailored financial solutions for those navigating the intricate landscape of hotel loans and financing.

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