Hotel & Hospitality Loans: How to Finance Renovations or Expansions
The hotel and hospitality industry is highly competitive, and staying ahead often requires renovations, expansions, or upgrades. Whether you're refreshing guest rooms, adding amenities, or expanding to a new location, securing the right financing is key.
In this guide, we’ll explore:
Types of hotel & hospitality loans
How to qualify for financing
Best lenders for hospitality businesses
Tips for securing the best loan terms
Why Hotels Need Financing for Renovations & Expansions
The hospitality industry thrives on customer experience. Outdated facilities can lead to negative reviews and decreased bookings. Financing allows hotel owners to:
Modernize interiors (lobbies, rooms, restaurants)
Upgrade technology (keyless entry, smart rooms)
Expand facilities (adding pools, conference rooms)
Improve sustainability (energy-efficient upgrades)
Acquire additional properties
Without proper funding, many hotels struggle to remain competitive. Let’s explore the best loan options.
Types of Hotel & Hospitality Loans
1. Traditional Bank Loans
Banks offer term loans with fixed or variable interest rates. These are ideal for established hotels with strong credit.
Pros: Lower interest rates, long repayment terms
Cons: Strict eligibility, lengthy approval
2. SBA Loans (Small Business Administration)
SBA loans (like the SBA 7(a) or 504 loan) are government-backed, offering favorable terms.
Best for: Expansions, major renovations
Loan amounts: Up to $5 million
Terms: 10-25 years
3. Commercial Real Estate Loans
Used for purchasing or refinancing hotel properties.
Types: CMBS loans, bridge loans, conventional mortgages
Terms: 5-30 years
4. Equipment Financing
For upgrading furniture, kitchen equipment, or tech systems.
Loan structure: Secured by the equipment
Terms: 3-10 years
5. Business Lines of Credit
Flexible funding for ongoing expenses or smaller upgrades.
Best for: Seasonal cash flow gaps
Credit limits: 10,000−10,000−500,000+
6. Alternative & Online Lenders
Fintech lenders offer faster approvals but higher rates.
Best for: Quick funding needs
Examples: OnDeck, Kabbage
How to Qualify for a Hotel Loan
Lenders evaluate:
Credit score (650+ preferred)
Business financials (revenue, profitability)
Collateral (property, equipment)
Business plan (expansion/renovation details)
Industry experience
Tips to Improve Approval Odds:
✔ Strengthen your credit profile
✔ Prepare detailed financial statements
✔ Show a solid business plan
✔ Consider an SBA loan if traditional banks deny you
Best Lenders for Hotel & Hospitality Loans
LenderLoan TypeBest ForBank of AmericaTerm loans, SBA loansEstablished hotelsWells FargoCommercial mortgagesProperty acquisitionsLive Oak BankSBA loansStartups & expansionsOnDeckShort-term loansQuick working capitalCIT BankEquipment financingTech & amenity upgrades
How to Apply for a Hotel Loan
Assess Your Needs – Determine loan amount & purpose.
Check Eligibility – Review credit score & financials.
Compare Lenders – Rates, terms, and fees.
Prepare Documents – Business plan, tax returns, bank statements.
Submit Application – Online or in-person.
Negotiate Terms – Secure the best deal.
Conclusion: Secure the Right Financing for Your Hotel
Whether you're renovating an existing property or expanding your hospitality business, the right loan can make all the difference. By understanding your options—from SBA loans to equipment financing—you can choose the best funding solution.