If you have reached the stage where you are researching hotel financing options, you already have a good chunk of time and effort invested into your new business venture.
For our purposes in this section, we will assume you have done your initial due diligence in terms of selecting a viable, promising hotel business to purchase.
Now it is time to get down to brass tacks and talk money. Dollars and cents – how much do you need, when do you need it by, how will you get it and what will you do with it to ensure your investors are paid back, on time, in full and with interest?
Put Your Presentation Together.
This may or may not be your first time seeking major financing, but it sure isn’t a prospective lender’s first time hearing a financing presentation!
So keep it short, sweet and confident. Prospective investors really only want to know three things:
– Can you pay the money back, on time and with interest?
– Will your plan turn a profit on their investment?
– Why should they invest in YOUR business and not somebody else’s?
Let Your Practical Shine Through.
All successful entrepreneurs are passionate about what they do. They are also practical planners with solid business and financial skills. Aim to present with “practical passion” each time you meet with an investor and you will have a much better shot at landing the financing you need.
Get Creative with Financing Options.
More financing vehicles are available today than ever before. All you need is some creativity and perseverance to find the combination that works for your needs!
–Conventional Bank (or Online Bank) Financing. No mystery how this works – you complete the paperwork, submit your financials and wait.
–Commercial Crowdfunding. A larger group of small to mid-sized private investors comes together to finance your venture.
–Fund It Room by Room as a Condo-Hotel. Can’t come up with the capital to buy the whole hog? Sell rooms, condominium style, to fund your purchase!
–SBA Loans. The Small Business Administration (SBA) provides a number of loan products, including SBA7(a) loans, micro-loans, small loan advantage (SLA) loans and 504 commercial real estate loans.
–Seller Carry Loans. In cases where the seller is willing to provide partial or complete financing, it may be possible to finance part or all of the purchase amount.
–Merchant Cash Advance (MCA). To qualify for MCA funding, you must accept credit cards. Here, your loan is guaranteed from historical credit card receipts.
–Lines of Credit. Whether secured or unsecured, lines of credit can be a good way to fill in the gaps left over from other funding sources.
–Bridge Loans. These short-term mortgage loans can get you over the hump when you are still awaiting confirmation of long-term financing for your hotel.