Looking for a way to fund a hotel development? Good news: whether you’re thinking about buying, remodeling, refinancing, or anything else, hotel financing terms and rates are outstanding right now.
However, getting a loan for a hotel isn’t always an easy task. Complexity can rapidly creep in when dealing with everything from property kinds and cash flow issues to your specific business objectives and which hotel financing providers to work with.
We are lucky to have a reputable commercial mortgage broker in Chicago named Clopton Capital, which specializes in pairing hotel loan applicants with the most reliable direct lending institutions and correspondent lenders who can meet their specific demands for asset-backed financing alternatives. Financing hotels, whether under construction, purchased, or operational but in need of renovation or refinancing, is a no-brainer.
We’ll help you locate risk-free rates, structured financing choices that fit your demands, and even specific circumstances like bridge financing for hotels.. You’ve come to the right site if you’re trying to figure out how to pay for a hotel purchase.
We are the hotel mortgage broker to contact if you are a private investor, a small or middle market real estate firm, or a family office in the United States of America. On this website, you will find more information about us and our services.
What is the process of funding a hotel?
A hotel loan is no more complicated than acquiring a loan for any other commercial property, despite its perceived additional complexity. When considering the various amounts and forms of hotel loans, depending on the case, the circumstances can alter.
Many of the expenditures connected with owning a hotel can be covered by hospitality financing. Among them are:
Financing for a new hotel’s construction
An existing structure is being relocated.
Loans and finance for motels
Making alterations to one’s dwelling
acquiring an already-existing structure
Keeping the lights on
Getting cash out of a hotel or refinancing it
Investing on new hotel equipment
Where do hotel loans come from?
There are a wide range of hotel finance loans available, each with its own set of features and perks tailored to the needs of the borrower. Hotel loans can be used for any of the following purposes, depending on your financial situation:
purchasing a hotel that already exists
Construction of a hotel.
Renovations, renovations, and expansions
The type of loan you need will be determined by the purpose of the loan, the amount needed, and your financial history.
Agriculture’s SBA 7a and SBA 504
a short-term loan
Lending to businesses through a traditional commercial real estate mortgage
It is our mission to work with you in order to establish the optimal path for your financial goals based on all the information we have available.
Independent or Franchised Hotel Financing?
Is it time to buy a hotel but you aren’t sure if you should go the independent or franchise route?
In the United States, more than half of all hotels are franchises. Staying independent gives you more control over your hotel, from artistic decisions to commercial decisions, while a franchise gives you access to the company’s resources, experience, and assistance.
For those who want to join a franchise or remain self-employed, we can connect them with the funding choices they need to thrive.
How to Obtain Hotel Financing
Clopton Capital is the ideal place to begin when looking for finance for a hotel-related project. We have access to a wide range of lenders that can provide you the best potential rates, terms, and advantages based on your specific financial situation and asset classes.
Are you interested in learning more about hotel mortgage finance terms? Continue reading.
Financing conditions for hotels
Despite the fact that hotel development financing terms and rates are continuously changing, there are some features that we are always proud to give our borrowers. When you deal with Clopton Capital to acquire hotel finance, you may expect the following terms.
Up to 75% of the hotel’s value can be borrowed against it (80 percent with SBA or USDA)
Fixed, risk-free rates for up to ten years
The amortization period can be extended up to 30 years.
Mortgage and mezzanine positions for the first time
Non-recourse loans with a variety of funding choices are available.
USDA and SBA 7a loans are included in the CMBS SBA 7a lending program (low down payment)
Loans to bridge the gap (as low as 1:1 debt service based on cash flow)
On a solid credit history, you can get a conventional commercial property mortgage.
Requirements for purchase, refinance, PIP, and construction
All loans ranging from $1 million to $50 million and underwriting that is fast and easy.
Solely hotel finance joint venture lenders are the ones we turn to.
We’d be happy to tell you about the financing options we have available. We help a lot of people get hotel loans, and these are the three most prevalent types.
Financing for a hotel
when it comes to purchasing real estate or an already-existing property that can be converted to an operational hotel
Construction Loans for the Construction of Hotels
Construction financing for a brand-new hotel from the ground up
Financing for the purchase of a hotel
Constructing a new hotel from scratch, whether as a franchise or as a stand-alone enterprise
Rates of Hotel Financing
Financing for hotels is subject to regular fluctuation based on supply and demand, but rates are now at historically low levels. Use our hotel loan estimate calculator below to get a more accurate idea of current interest rates for the type of loan you’re looking for.
Loan Calculator for Hotels
You may use our business mortgage calculator to figure out how much a hotel can borrow. It takes you step-by-step through the process of determining an approximate interest rate for a loan.
Financers of the Hotel Industry
There are numerous financial alternatives available to hotel buyers when it comes to finance. Clopton Capital, on the other hand, only does business with the most reputable companies in the field. Here is a list of some of the lenders we work with most frequently.
Financial institutions, such as banks and credit unions
Insurance companies that cover the risk of death
Lenders of commercial mortgage-backed securities
Bridge lenders from the private sector.
The Small Business Administration and the United States Department of Agriculture
Options for Financing a Hotel Assisting You
At CitrusNorth online, we offer competitive hospitality financing that can be used for new-build, completed construction, and renovations. You may be interested in our commercial refinancing mortgages if you have a well-functioning hotel business but a maturing or rising interest rate. If your loan program demands and scenario allow it, our commercial mortgage brokers may also find ways to connect you as a hotel buyer with other sources of capital, such as bridge or mezzanine financing as well as SBA or SBA 504 hotel commercial loans. Partnerships, trusts, corporations, limited liability companies, Delaware corporations, estates, and even foreign nationals can all be linked to investment structures.
Real-World Examples of Hotel Debt
Interested in a hands-on look at Clopton Capital? In this section, you’ll find three real-world examples of the work we’ve done for other hotel finance clients just like you!
Refinancing a Hotel & Getting a Loan
It was an LLC hotel owner who came to us to refinance and cash out a Holiday Inn Express in Florida that was already in operation. He’d held the property for four years and put a lot of money into upgrades, which resulted in a considerable rise in net operating income. Upon being approached, local banks were unable to match the LLC’s requirements due to the fact that they fell outside of typical constraints. It was very rapidly possible for us to establish a $9 million, 10-year fixed rate loan at a very competitive interest rate, amortize over 30 years, and directly cash-out the borrower for over $3 – all while maintaining the debt non-recourse.
PIP and pay off the current mortgage
Investors intended to pay off their current mortgage and then borrow alongside cash-out funds to undertake a PIP on the Best Western in North Carolina with non-recourse. Because the borrower had no idea what it would do with the property, it did not want to be tied into a significant prepayment. A $7 million, 70% LTV bridging loan earned $2 million for the PIP with low-interest payments, and the borrower had 24 months to decide whether to sell the property or refinance with a long-term mortgage, to the delight of the managing partner.
Commercial Refinancing Without Recourse
Investors from a large firm approached us about financing an independent hotel on a lease from the US Army. The group sought a $20 million commercial refinancing of an aging mortgage that had to be non-recourse, competitive with low monthly payments, and correctly addressed the complex ground lease (particularly the various outs it contained). An insurance business that specializes in ground leases helped us build a 10-year fixed-rate deal with a 30-year amortization at interest rates that were more than reasonable.
The best hotel finance broker in the industry can help you get the best possible hotel financing for your properties. For franchised and independent hotels across the country, we have access to mortgage lenders that offer incredibly competitive rates and terms that aren’t accessible at local banks.
Regardless of where your hotel is in its lifecycle, we can help you get a fantastic bargain.