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To succeed as a hotel owner, providing your customers with an excellent experience is critical. To stay up to date with the market around you, expanding and improving your hotel with construction projects can help. For example, buying a new hotel location can expand your customer base to a new demographic that you weren’t able to serve before. All in all, hotel construction projects provide a variety of opportunities to improve your company’s success. To get started on this path to success, however, you will need to secure the right hotel financing. To help your search, we’ve compiled some tips below on finding funding that fits your business.
First and foremost, you must have an organized understanding of your project. This understanding includes creating a financial plan for your construction goals. Essentially, ask yourself about the goal of the project and your financial requirements. Is your project meant for repositioning or building a new location? With this overall goal in mind, you can then organize the rest of your project and determine what you will require, especially in terms of financing. By setting up milestones throughout your project, you can understand in detail what each step of your construction project will require, be it staff or materials. Then, you can determine the cost of these required resources and build those costs into your financing request. Also, a concise outline allows the lender you contact to understand your needs quickly and to determine if their loans fit you.
Another aspect to consider is the current market activity around your business. To elaborate, looking at studies such as Deloitte’s 2019 US Travel and Hospitality Outlook can give you a broad sense of the hospitality industry‘s current standing. As the study advises, hotel owners should intend to plan for the long term. Long-term planning can be performed by looking back at the past 30 years of industry momentum and taking note of the up and down cycles. Understanding the behavior of the hospitality industry can prepare you for any potential market fluctuation that impacts your project. In other words, knowing the market will give you a better idea of your project’s performance. Showing a lender you are aware of this information is useful as well, as it gives the lender a more comprehensive picture of your project.
With your project organized and your financial plan in place, finding a loan is next. The first step to take when searching for a loan is to understand its requirements. For example, if you want to take out a Small Business Association loan, you need to ask yourself if you meet the SBA loan qualifications. There are several different types of SBA loans; however, most looking for hotel financing will use a Bridge loan or an SBA 504 loan. A commercial bridge loan is a unique funding option for hotel owners needing short-term financing solutions. Typically, you would take out this type of loan while still looking for a long-term financing solution, such as the SBA 504 loan. For an SBA 504 loan, you can use the loan to cover the costs of purchasing commercial real estate or necessary equipment. Below is a table that lists important details when considering an SBA 504 vs. a Commercial Bridge loan. [table id=8 /]
In the end, you want to ensure the hotel financing you receive meets your needs. By organizing your financial needs for your construction project, you can easily understand what loans work best for your situation. Moreover, with a concise financial plan in place, you can determine which lender works best with your needs as well. Picking the right lender is just as important as choosing the right loan. For instance, with lenders such as AVANA Capital, you are promised a hassle-free 5 step process.. With an SBA 504 loan, for example, AVANA Capital’s lending process starts with your application and goes all the way to the closing and funding of the loan. In other words, with AVANA Capital, you aren’t just giving an application to a lender. You’re also partnering with a team of niche industry experts who’ve dedicated 15 years to helping businesses succeed. With AVANA Capital, you will receive fast, flexible, and most importantly, reliable loans to achieve your business goals
The team at AVANA Capital focuses on preserving capital and creating growth for small businesses and entrepreneurs alike.
For more information on what loan meets your hotel financing needs, reach out to the team at AVANA Capital.