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It’s tough work being a hotelier. You have to juggle so many details and so many different types of staff, even if you don’t have a restaurant component. Everything has to be perfect for your guests. You’re always “on,” with a big smile and accommodating attitude. Regardless, some guests are just plain difficult. But the biggest challenge of all is often finances. So you have to be an expert on small business loans, too.


Hotel Magazine notes, “More small businesses fail because of cash flow problems than for any other reason. This can come down to a number of factors, such as not anticipating shortfalls quickly enough, spending too much on unnecessary stock or overestimating sales revenue … it’s not always easy to forecast what demand will be. But even successful businesses with full order books can fail by simply running out of cash for day-to-day operations.”

Even if you operate in a year-round resort area, the hospitality business is seasonal. Your hotel or motel or B&B may be reliably full during some periods. But vacancies are common in other parts of the year.


There are several types of small business loans you can use to boost or smooth out cash flow. But merchant cash advances have become a go-to option for hotels, motels, and B&Bs. That’s because this loan alternative is based on credit card transactions. And that’s a financial staple in the hospitality industry. The more credit card business you do, the more you can borrow at any given time.

The process is fast and simple. You get your money now. Then, you repay a set percentage of future credit card transactions. Repayment is always affordable, because there is no fixed monthly payment. At United Capital Source, we’re flexible on timing. We know your business has unique needs and challenges. Typically, we allow you to repay:

  • Daily
  • Weekly
  • Bi-weekly
  • Monthly

When you have a big day or week, your lender receives a larger payment. When sales are slower, the lender gets less. You’re never faced with a big payment when revenue is low. You don’t even have to hassle with paperwork, because your lender takes their portion off the top.

Merchant cash advances are repeatable. Once you’ve repaid what you borrowed, you can arrange for a new round of funding. I’m not suggesting your hotel should automatically do this, of course. But when you need to smooth the ups and downs of cash flow, MCA can be a valuable tool.

Even well-established hotels and motels can develop bad credit. If you’re in this situation, merchant cash advance can be a life-saver. Your credit isn’t an issue, because the lender is automatically repaid from future transactions.

There is a downside, in that MCA interest rates are high compared to bank loans. But merchant cash advances are entirely different than conventional small business loans. As with everything finance-related, you have to pencil it out.

Maybe you’re balking at this recommendation. You’re heard merchant cash advances are only for hotels and motels in trouble. The small business loans of last resort. Or you’ve heard some other negative story. Myths and misconceptions about lending just won’t die. That’s why I write articles like this. I want to debunk the myths and help small business owners learn the truth. Wisely used, merchant cash advances and other forms of borrowing can help your business grow. says you need to “get a good grip on where you cash flow currently stands and where it is likely to go in the future. Quite often small and mid-sized businesses aren’t prepared for all the costs associated with growing quickly. More sales could mean more employees and a bigger inventory. That’s money going out upfront. But when will it come back?” They quote Paul LaRock, a principal at consultancy Treasury Strategies in Chicago. “Too many companies get blindsided by unfavorable movements in cash flow that are predictable if they really sat down and thought through it.”


“Not only is cash flow management one of the most fundamental parts of running your small hotel,” says Little Hotelier, “managing it successfully is the key to keeping your doors open!” That’s true for every type and size of accommodation business.

And it’s why finance writer Philip Campbell says “it’s impossible to create true and lasting financial success in business unless you have the lifeblood of your business under control — your CASH. Neglect your cash flow and you’ll taste the pain and suffering that comes with failure in business.”

To improve your hotel’s finances, you should study cash flow management techniques common to all types of small businesses. And those specific to the hospitality industry. Here are some ideas:

  • Sharpen your marketing and customer service efforts to boost reputation and sales revenue. Focusing on previous clientele to generate increased repeat business is most cost-effective.
  • Cut costs (without sacrificing guest services).
  • Stretch out vendor payments, if possible. Paying over 30 or 60 days eases your monthly operations costs. So does negotiating lower rates.
  • Make sure your entire team is on board with your hotel’s financial goals. When everyone can see the big picture, they can work together more smoothly. And more effectively. You have to function as one in order to be successful. And profitable. This is an issue for lodging properties with very large, diverse staffs. But it can be equally challenging for motels or bed and breakfasts with just a few staffers wearing multiple hats.
  • Don’t over-invest in retail inventory such as branded apparel. Inventory is cash you’ve taken out of circulation.
  • Control the amount of credit you extend to corporate accounts. And insist on prompt payment.
  • Sharpen your forecasting skills. That includes monitoring your room rates. Accurate forecasting allows you to budget for future capital expenses. And that helps you decide in advance when you may need merchant cash advances or other small business loans.

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