Business Loans For The Hotel Industry
We work with business finance brokers and specialist alternative lenders that can help hotels access finance when it is needed for any reason. Below we look at one form of hotel business lending. When you apply, you will be able to discuss your requirements with the lender and they can help you find a suitable finance solution.
Hotel Merchant Cash Advances
Use your future card machine sales to access funding with a merchant cash advance.
Merchant cash advances are a relatively new form of financing for companies that make sales via a card terminal/pdq machine. Being able to use future card sales to access funding makes this method of borrowing a popular choice for hotels.
How Do Hotel Business Loans Work?
Traditional borrowing in the hotel industry often comes with a number of hurdles including lengthy applications, complicated paperwork, credit checks, personal guarantees and more.
One funding method that is popular with businesses that accept card payments are merchant cash advances. They require only minimal paperwork & a decision can be made swiftly, with funds being received in as little as 24 hours from application.
This form of funding is great for seasonal businesses such as hotels because repayments are based on a percentage of your daily card sales, typically between 10% and 15%. This means that repayments remain affordable during quieter trading times. During busier times higher card sales reduce the repayment amount quicker. Equally if you take payment in cash also, this is not used to repay your borrowing.
Merchant cash advances also do not charge interest and there is no set repayment period. As opposed to interest, there is one set fee which is calculated at the beginning and figures remains as the total repayment figure regardless of how long it takes to pay back the borrowing. Repayment is typically over 6 – 12 months.
An Example of A Merchant Cash Advance
A hotel that has been trading for one and a half years wants to purchase some new kitchen equipment at a cost of £10,000. The hotel has monthly card machine sales of £15,000 and applies for a merchant cash advance.
The hotel owner agrees a factor rate of 1.15 with the lender and a daily repayment rate of 10% of future card sales.
The total amount the hotel repays to the lender is £11,500 (£10,000 * 1.15). Based on average daily earnings of £500 and a daily 10% repayment, the hotel repays £50 daily to the lender for 230 days. All income received via alternative methods is not used to repay the hotel’s borrowing, e.g. cash.
Apply Today To Speak With A Lender
When you submit your application, it will be sent to a panel of leading alternative finance providers with whom you can discuss your requirements and suitable funding solutions will be provided. As well as merchant cash advances, there are a number of other types of funding available including asset finance, secured business loans and unsecured business loans.