Types of Hotel Refinancing
Hotel refinancing involves restructuring or replacing existing loans with new financing options to i
- Traditional Bank Loans
- These are conventional loans provided by banks for refinancing hotel properties. They typically require strong financials, good credit, and a proven track record of profitability
- SBA Loans (Small Business Administration Loans) (USA Only)
- SBA 7(a) and SBA 504 loans are popular options for hotel refinancing. These loans are government-backed and offer favorable terms, such as lower interest rates and longer repayment periods.
- If you own a property with ABC LLC and you have a SBA 504 and Equity, is possible to do an hotel expansion by refinancing with a cash-out and use the cash-out to buy a second hotel under the same ABC LLC (same origibal company) the CDC loan will remain the same and there will be a new larger conventional loan issue by the bank, but staying within the SBA frame
- Bridge Loans
- Short-term loans designed to "bridge" the gap between the current financial situation and long-term financing. These are often used for refinancing when quick funding is needed.
- Mezzanine Financing
- A hybrid of debt and equity financing, mezzanine loans are often used for refinancing when additional capital is needed. They are subordinate to senior debt but provide flexible terms,.
- Preferred Equity Financing
- This involves raising funds by offering preferred equity stakes in the hotel. It is often used in conjunction with other refinancing options to reduce debt.
- Commercial Real Estate Loans
- These loans are specifically designed for refinancing commercial properties, including hotels. They are typically offered by specialized lenders who understand the hospitality industry
- Cash-Out Refinancing
- This option allows hotel owners to refinance their property and take out additional cash based on the equity in the property. The funds can be used for renovations, expansions, or other business needs
- Tax Loans
- Tax loans are designed to help hotel owners manage cash flow by covering tax obligations during low-revenue periods, especially for seasonal hotels
- Construction Refinancing
- For hotels undergoing renovations or expansions, construction refinancing provides funds to complete the project while restructuring existing debt.
- Debt Consolidation Loans
- These loans combine multiple existing debts into a single loan with better terms, simplifying repayment and potentially lowering interest rates
- Ground-Up Development Refinancing
- This type of refinancing is used for newly developed hotels that need to restructure their initial construction loans into long-term financing.