Our hotel loans finance the updating or expansion of a hotel property. The loan can also help fund existing operations such as payroll, inventory, and more. A hotel loan is known as a commercial real estate loan for hotels or a hospitality loan. A hotel loan can also be used for motels, bed and breakfasts (or Air BnBs), or an RV park.

How Do Hotel Loans Work?

There are two main categories of hotel loans:

Recourse Loans: You are personally liable for the debt which is a greater risk to your finances.
Non-recourse Loans: Your lender is limited to your hotel property so you protect your other assets.

As with all commercial loans, a hotel loan is often non-recourse where the collateral is the hotel.

Other terms and conditions to consider include interest rates and repayment schedules. Also, your financial standing and the hotel’s value play a role. Energize Colorado only offers low-interest business loans and financing to hotels in Colorado.

How You Can Use Hotel Financing

A hotel loan comes in handy for several reasons, such as:

Refinancing

Finances are the lifeblood of your hotel’s operations. If you have an existing hotel loan, you can replace it with a new one with better terms such as a lower interest rate. This could free extra funds for your hotel’s operations. 

Operational Expenses

You can use your hotel loan for operational expenses, which include:

• Staffing: Your hotel loan can cover hiring costs, payroll, and other staffing-based expenses. We recommend outlining your hotel’s staffing strategy to ensure you utilize the funds in the best way.
• Equipment and Supplies: A hotel requires significant equipment and supplies in all areas. Your hotel loan is helpful for this purpose, and once again: plan how you will use your loan. 
• Marketing: Marketing builds brand awareness and helps to attract and retain customers. It helps to identify and plan your ad campaign types, reach potential, and results. 

Five Alternative Financing Options

Some alternative financing options for hotels include:

1. Traditional Bank Loans

A traditional bank offers hotel loans with structured repayment terms. While they may have lower interest rates, you may not always find that they are the best choice for your operations. 

You’ll face stringent credit requirements and long approval processes. You must also show more than two years of profitable business history. Many hotel owners find the collateral requirements and strict qualification criteria make traditional bank loans less desirable and impractical.

2. Loans from Energize Colorado

We understand the unique challenges of our Colorado hotel owners. We lend hoteliers like you hotel loans from as little to $5000 to as much as $150,000 at competitive interest rates.

Unlike traditional banks, we don’t just focus on credit scores. We consider your hotel’s value proposition and potential. Our streamlined process and flexible terms make hotel financing accessible when and how you need it. 

3. SBA Loans

The Small Business Administration (SBA) provides government-backed loans designed for hotel owners. These loans often have lower interest rates and longer repayment terms than traditional bank financing. 

SBA-approved lenders can offer loans up to $5 million for businesses that meet the SBA requirements. While these loans have attractive terms, you must provide extensive documentation. You must also be patient as the approval process often takes several months.

4. Business Line of Credit

A business line of credit offers easy access to funds as you need it. You only pay interest on what you borrow, which makes it ideal for managing seasonal changes or unexpected expenses. It’s like a credit card for your hotel with better rates and terms designed for business use. However, you may not be able to access as much as needed. 

5. Crowdfunding

Crowdfunding helps you raise money from your community as you build a buzz around your hotel. While it works well for some concepts, success isn’t guaranteed. You need to put in significant marketing to gain social media traction. 

This approach works best for unique hotel concepts with compelling stories that resonate with potential funders.