Permanent loans are used to buy hotels or refinance existing hotels. They are also great for financing property improvement plans (PIPs). Permanent loans typically have a term of ten years, or longer. The interest rate for a permanent loan is most often fixed during the life of the loan. Permanent loan sources include CMBS lenders, the SBA, the USDA, and sometimes, conventional banks.
Bridge loans have many uses but generally take you from Point A to Point B. For instance, they can provide short-term financing to bridge the gap between acquisition of a new hotel and securing a permanent, long-term loan on your hotel. Bridge loans may also be used to fund a Property Improvement Plan (PIP) or a flag conversion.
While bridge loans are usually more expensive than permanent financing, they can provide the flexibility that you need with shorter terms and usually no prepayment penalties. Bridge loans normally carry a 3-year term and two, 1-year extensions. Payments are typically interest only. Bridge loans can be the perfect fit for an owner looking to add value to a hotel property through a PIP or conversion and then sell or refinance.
These days, bridge lenders seem to pop up on every corner making big promises to borrowers. However, a loan from these unproven lenders can be risky business and often leads to headaches and lost deposits. MidCap Hotel Loans only deals with well-established bridge lenders that have committed capital and a proven track record. We also steer you clear of loan-to-own shops whose intention is not to be repaid but actually to own your hotel in the end. Bridge loans are an excellent source of financing, but do not navigate these waters alone.
Call MidCap Hotel Loans today. (727) 223-8989
Finding a hotel construction loan is becoming increasingly difficult. Traditional banks are more likely to lend to borrowers with significant development experience and an attractive net worth and liquidity.
Banks may be more willing to extend hotel construction loans to more borrowers under the SBA-backed program. SBA loan proceeds can be used for land acquisition and ground-up hotel construction.
MidCap Hotel Loans stays in contact with many traditional banks across the country including lenders that are part of the SBA’s Preferred Lenders Program. If construction financing is available for your hotel, we will find it!