Finding And Managing Motel Loans

Running a motel is a unique business. The investment to purchase the property is significant and the ongoing expenses associated with running the operation can seem overwhelming. However, once your motel is operating smoothly, the business can be a reliable source of income for you and your family for years. In fact, people who start operations in the hospitality business in Canada typically stay in the industry long-term. That being said, most people need a motel loan to get into the business. This money can be used to purchase an initial property, expand an existing property, or to perform remodeling projects throughout the motel.

Below, I’ll describe some of the factors you should consider when applying for motel loans. I’ll explain the process of getting a loan for your motel as well as a financing option that is becoming more popular throughout major cities in Canada.

Things To Consider For A Motel Loan

The first thing to consider is your objectives for the working capital that you’re seeking. The bank who offers you a motel loan will want to know how you plan to use the money. For example, you may already own a small motel in Toronto but need capital to add on to the building. Alternatively, you may want to purchase your competitor’s hotel in Vancouver, thereby expanding your own motel operation. Or, you may need funding for a significant renovation or remodeling project that can include repairs and upgrades to your motel. Identify your financing needs before applying for a loan from a Canadian bank. Doing so will dramatically increase your chances of being approved.

Where To Find Canadian Motel Loans

If you want to secure financing through conventional channels (I’ll explain an alternative below), start at the bank with whom you have an existing relationship. Most banks in Canada value the relationships they have with their clients. As a result, they’re more inclined to try to meet your needs for a motel loan. If your bank is unwilling to offer you a loan, introduce yourself to other lenders. Many are willing to offer competitive terms in order to gain your business. Another option is to ask other motel owners. They may be willing to tell you which lenders they used for their motel loans.

Motel Loan Rates And Fees

The interest rate on your motel loan will depend upon a host of different factors. These can include your credit rating, the current economy within Canada, prevailing interest rates and market dynamics for the hospitality industry. Because motel loans can exceed $1,000,000, you should expect to pay significant fees to secure the financing. These fees can include processing, research and the paperwork involved. Most Canadian motel loans end up carrying fees that total about 1.5% of the loan value.

Are Conventional Loans The Best Option?

Motel owners need flexibility in their financing. First, they need to be able to use the capital they obtain for a variety of purposes. Often, traditional motel loans from banks or other lenders may preclude certain uses for the funds. Second, much of a motel’s business is seasonal. That means that some months are slower than other months. This can make committing to a fixed payment schedule stressful.

Canadian business owners (including motel proprietors) have begun to realize the benefits of using merchant cash advances for financing. Not only can the funds be used for any purpose considered important by the motel owner, but repayment is a factor of revenues. That is, when revenues are healthy, the level of repayment reflects it. Likewise, when revenues dip, the repayment is flexible. In major Canadian cities such as Toronto and Vancouver, these business cash advances can prove an invaluable source of cash flow and working capital.

Are you currently accepting payments using credit or debit cards at your business? If so, we can probably help you find the money you need fast. Apply Now!