Specializing In Small Business Loans For Hotels, Motels & Lodging

Each of the products listed above can suit a different type of expense or cash flow problem. For example, hotels often face the dilemma of having to prepare 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 appropriate for hotels because most of their guests pay via credit card and make reservations ahead of time. This gives hotels a reasonably clear picture of how much revenue from credit card sales they’ll generate 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 always 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.

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.

Also, 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 look at their current reservations as well as reservations 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 2012 study found that just 8% of 4,000 travelers are always loyal to the same hotel brand.