🏨 Tailored Financing for Hospitality: Specialized loans designed for hotels, motels, and lodging businesses, addressing unique industry needs.
💰 Diverse Loan Options: Access to various financing solutions for the hospitality industry, including SBA loans, equipment financing, and working capital loans, to support different business scenarios.
⚡ Quick & Simple Application: Streamlined online application process with fast approvals, ensuring timely access to funds.
📈 Flexible Terms & Amounts: Loan amounts ranging from $5,000 to $10 million, with terms tailored to fit your business’s financial situation.
🛠️ Support for Renovations & Upgrades: Hotel financing needs encompass property improvements, technology upgrades, and other enhancements to enhance the guest experience.
🧾 Assistance with Documentation: Guidance provided to help prepare necessary financial documents and business plans, improving loan approval chances.
🌐 Nationwide Service: Serving hotel and motel businesses across the United States, with a focus on personalized support.
🤝 Dedicated Support Team: Experienced funding specialists are available to assist throughout the loan process, ensuring a smooth experience.
Few businesses understand the struggles of seasonality more than hotels and motels. Slow seasons can be downright treacherous, and it’s getting harder and harder to predict when they will start or end. Busy periods can arise out of nowhere as well.
However, hotel guests tend to make reservations in advance when business is slow. If online images don’t show stylish furniture and amenities at this time, potential guests will give their business to the myriad other hotels in the area.
United Capital Source offers business loans for hotels, motels, and lodging establishments that aim to remain competitive throughout the year, regardless of the fluctuations caused by unexpected expenses and shifts in demand.
Business Loans for Hotels and Motels are specifically designed to address the cash flow cycles and recurring expenditures of hotels and motels. In addition to short-term needs and larger purchases, business Loans for hotels can bridge gaps in cash flow during slow seasons.
Business loans for hotels can come in the form of:
Each loan program listed above can suit a different type of expense or cash flow problem. For example, hotels often face the dilemma of preparing for the busy season during the slow season. They can upgrade their furniture and amenities and launch advertising campaigns while potential guests are planning upcoming trips. Two logical solutions for seasonal issues are a Merchant Cash Advance and a Business Line of Credit.
A merchant cash advance is particularly suitable for hotel financing because most of their guests pay with credit cards and make reservations in advance. This provides hotels with a reasonably clear picture of the revenue they can expect from credit card sales in the coming months. The borrowing amount and cost for a Merchant Cash Advance are based on previous and future credit card sales. You can get approved when business is slow, make your necessary investments, and not have to worry about making substantial payments until the busy season begins.
A Business Line of Credit, on the other hand, is best suited for hotels that are constantly dealing with sudden expenses. Maybe some guests have canceled their reservations out of nowhere. Perhaps one of your facilities needs repairs, and you’ve just purchased a new order of retail inventory.
If these things happen to your business quite frequently, a business line of credit might be the perfect solution. It’s designed for short-term expenses since you’re supposed to pay off the full balance as quickly as possible. And once you pay back what you’ve borrowed, that money becomes available again. To clarify, you don’t have to continuously apply for funding every time you need extra cash to keep your business running.
Established hotel owners with excellent credit could also consider SBA Loans. Popular SBA loan programs for hotels include the SBA 7(a) loan and the SBA 504 loan. To qualify for SBA hotel loans, borrowers typically need a personal credit score of at least 650 to 680. Due to the larger amounts, some business owners use SBA hotel loans to purchase real estate rather than lease their location.
| LOAN TYPES | MAX AMOUNTS | RATES | SPEED |
|---|---|---|---|
| Merchant Cash Advances | $7.5k – $1m | Starting at 1-6% p/mo | 1-2 business days |
| SBA Loan | $50k-$10m | Starting at Prime + 2.75% | 8-12 weeks |
| Business Term Loan | $10k to $5m | Starting at 1-4% p/mo | 1-3 business days |
| Business Line of Credit | $1k to $250k | Starting at 1% p/mo | 1-3 business days |
| Receivables/Invoice Financing | $10k-$10m | Starting at 1% p/mo | 1-2 weeks |
| Equipment Financing | Up to $5m per piece | Starting at 3.5% (SBA) | 3-10+ business days |
| Revenue Based Business Loans | $10K – $5m | Starting at 1-6% p/mo | 1-2 business days |
Small business loans allow you to stay competitive despite the looming threats of seasonality and sudden expenses. You can make upgrades so they can be finished when customer interest peaks. If a cost arises during one such period, you can act quickly even when business is slow.
The ability to cover essential expenses amid changes in the weather is crucial for hotels. Typical conditions, like a snowy winter, a chilly fall, or a clear, hot summer, aren’t so ordinary anymore. Even if you stay on top of your cash flow, it’s nearly impossible to predict what kind of season you’ll have. Thus, there’s a good chance that your slow season lasts a little longer than usual, or your busy season doesn’t deliver like it usually does. Business loans prevent these uncertainties from impeding your growth or general stability.
Compared to other industries, hotels may be less likely to run into problems when repaying debt. When deciding the right time to apply, they can review their current reservations and those from the same period last year.
Lastly, it’s crucial to note that business loans for hotels do not require entirely consistent cash flow. You can still get approved for most of the products mentioned above, even if revenue tends to fluctuate month-to-month.
Some hotels might avoid debt solely because they can’t predict what the weather or demand will look like in the coming months. Imagine having to pay off debt when reservations are being canceled left and right. What initially seemed to be just a little rain could turn out to be a catastrophic storm.
It’s also hard to determine how far you should go in terms of renovations. There’s always more you can do to make your rooms look more updated. Should you also renovate your pool or lounge area? How much is too much? This makes it challenging to figure out how much you should borrow.
And once you’ve executed your investment, you might find that a nearby competitor has taken a great deal of your business. After all, a study found that just 8% of 4,000 travelers are always loyal to the same hotel brand. In cases where a borrower defaults, lenders could potentially pursue your assets if you used collateral to secure the loan.
Pros:
Help manage seasonal fluctuations and unexpected expenses.
Allow for timely upgrades before peak travel periods.
Provide financial stability during unpredictable weather patterns.
Support growth even when business slows down temporarily.
Hotels can time applications using reservation trends for better planning.
Approval is possible even with inconsistent cash flow.
Cons:
Weather and demand unpredictability can make debt risky.
Difficult to gauge how much to borrow for renovations or upgrades.
Risk of overinvesting in features that don’t improve revenue.
Competitors may undercut gains from your investment.
Collateral-based loans may put your assets at risk if you default.
Some loans may require a personal guarantee.
The amount of paperwork required for the loan application process depends on your chosen product. For most products, funds can be approved and distributed in up to three business days. Here’s how to apply:
The first step is choosing the most sensible solution to the problem at hand. This should require a decent amount of research, as each product is designed for different types of expenses and cash flow cycles. Are you looking to cover a short-term or long-term cost? Is demand expected to increase or decrease in the coming months?
Considering the funds’ purpose will also help us determine the correct borrowing and terms for your needs.
Here are the documents and information required for the seven products mentioned above:
Driver’s license
Voided business check
Bank statements from the past three months
Invoice for equipment (for Equipment Financing)
SBA loans require additional documents and information. To learn what’s needed for the SBA loan application, visit our SBA loan page.
You can begin the application process by calling us or filling out our one-page online application. Either way, you’ll be asked to enter the information from the previous section along with your desired funding amount.
Once you apply, a representative will reach out to you to explain the repayment structure, rates, and terms of your available options. This way, you won’t have to worry about any surprises or hidden fees during repayment.
If and when you’re approved, after closing funds should appear in your bank account within 24 hours. For SBA Loans, it typically takes 3-5 weeks to receive approval and 45 to 60 days to reach closing.
Your business loan isn’t just a way to get financing for your business. It’s also an excellent opportunity to start building (or improving) your credit.
Regardless of the type of business loan you get, make all of your required payments on time and in full. If you get a business credit line or another form of revolving credit, keep your balance below the credit limit.
Consistently making your business financing payments on time and in full will positively impact your credit. And that means preferred rates and terms when you next need business financing.
If we decline your application, it may be because you applied for the wrong product for your cash flow needs. In this case, we would likely recommend a different product with a less hazardous repayment structure.
We might also decline your application after determining that you cannot afford to take on more debt at this time. Instead, your needs and financial circumstances might be better suited for another financing tool, like a business credit card or even a personal loan.
Yes, you can use a business loan to purchase a hotel. However, this is only possible if you’re currently running another hospitality business with strong cash flow and profitability. Business loan providers rarely approve loans for buying existing businesses if you’ve never owned one before. If you aren’t currently operating a profitable business, you must have some form of reasonable equity to invest, like real estate, for a hotel acquisition loan.
It may be more challenging to get a loan from a bank lender. Traditional lenders, such as banks, typically offer conventional loans for hotels and often have stricter lending criteria and lower interest rates.
You can use the loan’s proceeds for various needs. Hotel borrowers can use hotel financing options for various needs, including (but not limited to):
Furniture upgrades for a hotel business
Upgrades to other equipment, like kitchen appliances or lighting equipment
Covering payroll and other operational expenses during slow periods
Marketing
New construction or renovating existing buildings.
Opening a gift shop
Purchasing retail inventory for a gift shop
External maintenance and signage
Purchasing catering supplies for the hotel kitchen
Adding a hotel property or purchasing commercial real estate.
The U.S. Small Business Administration backs SBA loans for hotels and allows access to guaranteed funding for small business owners. The SBA does not fund these directly. Instead, small business owners must apply to approved lending partners. SBA-approved lenders include local and national banks, credit unions, and alternative lenders. Bank loans often have stricter qualifications than those of non-bank lenders.
SBA 7(a) loans offer a maximum loan amount of $5 million. SBA 504 loans can be used for purchasing fixed assets and are attractive due to fixed rates and higher loan amounts. Most SBA loans have fixed monthly payments. SBA lending is one of the best options for a low-interest loan. The loan term for an SBA loan can range from 7 to 25 years.
The SBA loan application can be lengthy and challenging. Most SBA lenders will review your credit and revenue history. SBA lenders look for a good personal credit history, often with scores between 650 and 680+. SBA loans require a hard credit report inquiry.
You cannot already have an existing hotel loan. SBA hotel loans typically require a down payment of between 10% and 30% of the total loan principal. The SBA loan application process can be extensive and requires multiple documents, including personal and business tax returns.
Yes, five of the seven products mentioned above are accessible for borrowers with bad credit. Your rates may be higher, and your terms may be shorter because bad credit makes you more likely to default. However, if you have strong cash flow or can provide collateral, your bad credit may have less impact on your rates and terms. We can also customize your terms and payment frequency to ensure that you can make payments while staying current on other bills.
For some products, your credit score is irrelevant. Approval for a merchant cash advance is based on your debit and credit card sales volume. With accounts receivable factoring, approval depends on your customer’s creditworthiness, not your own.
The only products that are not accessible with bad credit are business term loans and SBA loans. Compared to the other five options, these options carry higher borrowing limits, lower interest rates, and longer terms. If you have bad credit, you’ll be assigned shorter terms to ensure you repay the loan in full.
Fraud Disclosure:
Please be aware that individuals have been fraudulently misrepresenting to business owners (and others) that United Capital Source, Inc. (“UCS”) can assist small businesses in receiving government grants and other forgivable business loans, when in fact those grants or loans do not exist or are not available. These individuals have ulterior motives and are engaging in the unauthorized use of the names, trademarks, domain names, and logos of UCS in an attempt to commit fraud upon unsuspecting small business owners.
UCS will never communicate with a prospective client on Facebook, Facebook Messenger, or any other type of social media. Further, any email communications will always come from an official UCS email address and not a Gmail, Yahoo, or other email domain. If you believe you have been contacted by someone posing as an employee of UCS, please email [email protected].
