Hotel / Motel Loan by Tom Markel
The hospitality industry can be a profitable venture for you or it can be a complete financial disaster. The way to ensure the former and avoid the latter is to have a solid business plan walking in and a finance source that you can rely on. You'll have to write the plan yourself, but we have some resources and tools here that you can use to polish it up. We also have the list of finance sources you'll need to get your hotel or motel business off the ground. All you need to do is fill out one application form and we'll take care of the rest. iBank will shop your request around and find you the right lender.
Are you buying an existing structure or a plot of land to build a new one? If you're looking for a commercial mortgage to buy an existing hotel or motel you'll need to get your hands on some of the previous owner's financial records or reports. The bank will want to know whether or not that location was profitable before. If not, they'll want to know how you plan on turning it around. That's a big issue for any lender because it will help determine your ability to pay back the loan. Include a plan of action in your business plan and make sure you have a back-up plan if the first one is unsuccessful.
If you're a developer and you're looking to buy, renovate, and sell, you'll need to prove your ability to do the work and also provide evidence that the market will be favorable for a hotel sale when you've completed the construction. These issues are more closely examined now because many banks have been stuck with a number of foreclosed properties in recent years. Commercial ventures aren't classified the same as home mortgages, but you will need to include a resale strategy as part of your business plan.
If you're buying land and looking to build on it, you may need to take out a development loan to create the infrastructure. Sewage, power, and water access need to be established, as does roadway access if the land is a distance away from an existing road. If you're building a luxury hotel in the country, you'll need to add the cost of these elements into your business plan. It's not just the building itself that you'll have to pay for. Some lenders will put all of this on one loan. Others will request that you take separate loans in each phase, development, construction, and working capital.