Home / Hotel Financing

Hotel Financing and Hotel Loans

Wondering how to finance a hotel project? The good news is that hotel financing terms and hotel financing rates are currently in an excellent place, whether you’re considering a hotel acquisition, remodel, refinance, or other project.

That said, the process of hotel financing isn’t always simple. From property types and cash flow concerns to your unique business goals and choosing from the many hotel financing companies available, things can get complicated quickly.

Fortunately, Chicago-based Clopton Capital is a trusted national commercial mortgage broker dedicated to matching borrowers interested in hotel lending to the most trusted direct lenders and correspondent lenders aligned exactly with their needs for asset-backed financing options. Never is this more true than when it comes to funding hotel developments in construction, being purchased or already functional with renovation/ refinancing requirements.

We’ll help you find risk-free rates, structured finance options that meet your needs, and even specialty cases such as hotel bridge financing. If you’re wondering how to finance buying a hotel, you’ve come to the right place.

If you are a private investor, small/middle market real estate entity, or a family office anywhere in the USA with hotel investment intentions, we are the hotel mortgage broker to call. More details about us and our services on this page.

hotel financing

Hotel Loans Program Details

Our programs are available starting a $1 million and going up from there.

Most of our deals cap out at 75% LTV, however by using SBA 7(a) or SBA 504 loans we can get to a higher first mortgage of up to 90%.

We are able to offer fixed periods up to 10 years typically, however for high quality and low leverage deals we may be able to go out further.

Depending on the LTV, we can structure interest only periods into the loan. However this is typically for very low leverage properties or bridge loan transactions.

Some of our lenders require recourse, while others do not, it will depend on what your are looking for in loans terms to determine which direction we need to go.

We can work in every market in the United States, just no international projects.

We can work with hotel projects at any point in the life-cycle.

How does hotel financing work?

Despite the seemingly added complexity of purchasing a hotel, the basic process of securing a loan isn’t dramatically different from any other commercial property mortgage loan. Where the circumstances can change is when you take into account the various sizes and structures of hotel loans, depending on the situation.

Generally, hospitality financing allows investors and developers to cover a number of costs associated with hotel ownership. These include:

  • Hotel construction financing for a new building
  • Relocation for an existing building
  • Motel loans/motel financing
  • Renovation or remodeling
  • Purchasing an existing building
  • Funding operating expenses
  • Refinancing a hotel and/or getting cash out
  • Purchasing new equipment for your hotel

What are common types of hotel loans?

There are many different types of hospitality finance loans, each designed to offer the right terms and benefits to borrowers with specific needs. Depending on your situation, you may be interested in a hotel loan for any of the following goals:

  • Purchase of an existing hotel
  • Hotel construction
  • Refinance or refinance and expansion
  • Renovation
  • PIP financing

Depending on the purposes of your loan, the amount of funding required, and your financial history, you may seek out one of the following loan types.

  • SBA 7a
  • SBA 504
  • USDA
  • Bridge loan
  • Conventional commercial property mortgage loan

At Clopton Capital, we’ll work with you to determine the best path forward for your financing goals based on all of the details about your situation.
hotel loans

Hotel Financing: Independent or Franchise

Considering investing in a hotel but don’t know whether independent or franchise financing is right for you?

Nowadays, over half of all hotels in the United States are part of a franchise. Buying into a franchise provides the benefits of the parent company’s resources, experience, and support, while staying independent gives you more control over how you run and operate your hotel, from creative decisions to business decisions.

Whether you’re looking to join a franchise or stay independent, we can link you with the financing options you need to succeed.

How to Get Financing for a Hotel

In order to obtain financing for a hotel-related project, the best place to start is with Clopton Capital. Thanks to our vast network of lending partners, we’ll secure you the best possible rates, terms, and benefits based on your unique needs and asset classes.

Curious about what terms you can expect for hotel mortgage financing? Read on.

Hotel Financing Terms

Hotel development financing terms and rates are constantly changing, but there are some details that we’re always proud to offer our borrowers. Here are some of the details about what terms you can expect when working with Clopton Capital to secure hotel financing.

  • Hotel Loan to Value ratio up to 75% (80% with SBA or USDA)
  • Up to 10 year fixed rates, risk-free rates
  • Up to 30 years amortization
  • First commercial mortgage & mezzanine positions
  • Non-recourse loans available with flexible funding options
  • CMBS
  • SBA 7a loans, SBA 504 program loans, & USDA loans (low down payment)
  • Bridge loans (as low as 1:1 debt service based on cash flow)
  • Conventional commercial property mortgage loan on good credit
  • Purchase, refinance, PIP and construction requirements
  • All loans from $1 million to $50 million + and fast underwriting
  • We approach only lenders that specialize in hotel financing
  • Joint Ventures

Wondering what type of financing we offer? Here are the three most common hotel loans we help our borrowers access.

Hotel Building Financing

For acquiring properties or purchasing an existing hotel building to turn into a functional hotel

Hotel Construction Financing

Financing for constructing a new hotel from scratch
hotel construction financing

Hotel Acquisition Financing

Acquiring an existing hotel, whether as part of a franchise or an independent business

Hotel Financing Rates

Hotel financing rates are constantly changing based on market conditions, but the current trend in the industry means that rates are in a historically great place! For a more detailed estimate of current rates based on the type of loan you’re seeking, use our hotel loan estimate calculator below.

Hotel Loan Calculator

If you want to calculate hotel loan rates yourself, just head on to our commercial mortgage calculator. It easily guides you through the process of calculating your loan rate estimate.

Hotel Financing Companies

When it comes to financing for hotel purchase, there are countless options available to borrowers. But at Clopton Capital, we only work with the most trusted names in the industry. Our network of lenders is wide, but here’s a list of some of our go-to partners.

  • Banks & Credit Unions
  • Life insurance companies
  • CMBS lenders
  • Private bridge lenders
  • Small Business Administration & USDA

Hotel Financing Options We Provide

We have competitive hospitality financing that’s adaptable to new-build, build completions, and renovations alike. For hotel enterprises fully functional but with mortgages maturing or with interest rates going too high our array of commercial refinancing mortgages will be of interest to you. Aside from this, our commercial mortgage brokers may see an opportunity to connect you as a hotel purchaser to bridge loans, mezzanine financing, SBA loans, SBA 504 hotel commercial loans, preferred equity, and commercial real estate private equity depending on your loan program needs and situation. All of the above can be connected to investment structures that cover partnerships, trusts, corporations, LLCs, Delaware Corporations, estates, and even foreign nationals.

Hotel Financing Case Studies

Want to see Clopton Capital in action? Here are three real case studies of work we’ve completed for hotel financing borrowers like you.

Hotel Refinance & Cash Out

A hotel owner structured in an LLC came to us looking to refinance and cash out of an existing Holiday Inn Express located in Florida. He had owned the property for 4 years and had invested significant capital into improvements, thus increasing the net operating income substantially. Local banks on being approached were unable to meet the LLC’s requirements, as these were outside traditional parameters. Very quickly we were able to structure a $9 million, 10-year fixed rate loan at a very competitive interest rate, 30-year amortization, and directly cash-out the borrower with over $3 – all while keeping the loan non-recourse.

Pay-Off Existing Mortgage & Perform PIP

A partnership investor wanted to pay off its existing mortgage, and then borrow alongside cash-out funds to perform a PIP on a Best Western located in North Carolina with non-recourse. Additionally, the borrower did not want to be locked into a large prepayment because it did not know what it planned to do with the property. The managing partner was very happy with our resolution: we structured a $7 million, 70% LTV bridge loan that generated $2 million for the PIP with low-interest payments, giving the borrower 24 months to decide on either selling the property or refinancing again with a long-term mortgage.

Non-Recourse Commercial Refinance

A group of investors in a corporation approached us to fund an independent hotel that was on a ground lease with the US Army. The group was looking to obtain a $20 million commercial refinancing of a maturing mortgage that had to be non-recourse, competitive with low monthly payments, and was expected to competently address the complex ground lease (particularly the various outs it contained). We structured a 10-year fixed rate deal with a 30-year amortization provided by a life insurance company fully acquainted with ground leases, at interest rates that were more than acceptable.

Conclusion

Work with the top hotel finance broker in the market and access highly competitive hotel financing for your properties. We are able to arrange loans for franchised as well as independent hotels across the country from mortgage lenders that offer extremely aggressive rates and terms not available at local banks.

Regardless of where your hotel is in the life-cycle, there is a great deal for it through our firm.

Contact Us - 866-647-1650