Securing finance to open a hotel can be tough, with lenders always looking to ensure they back projects with a chance of success. Properties themselves are good security but you may need to provide additional securities on top of this to get the funding you require. Factors like assets and other properties could be considered to help support your application. You may also need as much as a 30% deposit.
One of the best ways to secure the hotel or B&B funding you want is to show lenders you have a solid business plan in place and have carefully considered how you will be successful. The hotel sector is a challenging one with many different issues to contend with including competition, seasonal demand and service standards. To get the finance you need you must give the lender confidence that you will be able to overcome all of these and be able to make your repayments.
There are many key issues that lenders will look at when considering your application for hotel finance. Firstly they will usually consider the feasibility of the project and whether they believe it will work as you expect. They will look at the resources you have available, your knowledge and experience to determine if you have what it takes to make it work.
Perhaps the biggest consideration lenders will make is the location. This plays a huge part in your potential revenues. It can be tricky to secure finance for a new project in a saturated market or where there will be little demand. You’ll need to convince the lender your knowledge of the area is good and show them why you think it is the right place to open a hotel.
Experience is important and lenders will always be apprehensive about lending to inexperienced people. This is by no means to say that if you don’t have any you won’t be able to secure finance, or that you’ll automatically get it because you have operated a hotel in the past. It is essential that you show you have the skills and knowledge to run an establishment successfully.
A final thing that may come into consideration is the condition of the hotel and your plans. If you show people a high quality, luxurious establishment they are more likely to lend to you because it will command more value. Beautiful furnishings, decorations and fixtures will always be appreciated and provide better security for a loan.
If you’re looking to take steps into the hotel market, whether your project will be large or small, we can help you to browse the market for finance providers. We are highly experienced in the field of hotel and B&B funding and we strive to provide support and advice that will help you to get the funding you need. We also cover re-mortgaging if you want to find a better rate on current borrowing.