Buying an existing hotel or building one from the ground up can be an exercise in advanced logistics. Figuring our what equipment needs to be acquired, the number of staff, supplies, inventory, etc. – all while remaining within budget guidelines, can seem harried at times. But before those stages are reached, renovations and construction come first. Once of the main challenges facing hotel owners is that very few banks and conventional lending institutes can offer the funding needed to cover the cost of construction on a hotel. Additionally, bank loans have very restrictive requirements, making access to the necessary funding very prohibitive. Fortunately, commercial finance companies have the capital resources available to not only cover renovations and ground-up construction, but the ability to tailor large construction loans to meet the needs of the specific hotel project – whether it involves updating plumbing and wiring, or developing untouched land from scratch.
1.) First Mortgage Bridge Construction Loans
First mortgage bridge financing is designed for hotels, with construction costs ranging from $7 million on up to $35 million. These construction loans normally close in under 45 days to allow hotel owners to close on time-sensitive investment opportunities and set started on construction quickly. Interest rates are very low (in the single digit range), and can be fast tracked without having to go through the Small Business Administration (SBA) loan process.
2.) Large Construction Loans for Hotels
Large project construction loans are typically reserved for ground-up property development. Large construction loans start at $50 million and can increase to cover any amount above that mark. This type of financing is structured around a combination of equity and debt funding, and can provide up to 85% of the capital needed. Because large construction loans are not offered through the “one size fits all” approach of traditional banking, the agreements can be tailored to suit the hotel project, allowing business owners to cover the cost throughout each stage of construction, to ensure the hotel is erected quickly and efficiently. This gets business from ground breaking to grand opening as soon as possible, which means the hotel can start generating revenue quickly.
Want to learn more?
If you are purchasing an existing hotel, or if you are building one from the ground up, call Perfect Alliance Capital at 847-851-2223. Our team specializes in large construction loans to help hotel owners get the financing they need, without getting caught up in the bureaucracy of traditional lending. We offer solutions for time-sensitive deals to get your operation underway quickly.