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Hospitality Business Loans

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It’s no secret that the hospitality industry took a hit in 2020. With the COVID-19 pandemic keeping everyone home and governors limiting interstate travel, it was a tough time to be in the hospitality industry. It’s estimated that the pandemic led to $492 billion in losses for the industry, but things are on an upswing.

In the United States, there are approximately 91,000 hotels and motels which generate over $194 billion of revenue in a normal year. There are signs of recovery, with hotels expected to add 200,000 direct hotel operations jobs in 2021 and 56% of customers saying they expect to travel for leisure in 2021. Pre-pandemic, wages accounted for 25% to 30% of a hotel’s revenues, making it a significant expense for hotel operators.

The industry also encompasses amusement and theme parks, tourist activities and attractions, dining and guided tours. All these hospitality-related businesses also depend on tourism and travel for their livelihoods.

If you’ve been thinking of opening or acquiring a hotel, or expanding an operation, or making another investment to help you recover from 2020, you might not have the cash reserves to fund your plans. Borrowing could be a smart choice.

If you already know that it’s time to take out a loan, it takes just a few minutes to apply online. But before you apply you should know how you intend to use the funds, how much capital you need to borrow, and the best loan for your hospitality business.

What Do I Need to Qualify?

Below is a list of the requirements to get approved for business funding with our most basic program. There may be additional factors that are considered, meeting these three requirements though gives you a very high chance of having your application approved.

How Do I Apply?

Applying has never been easier. You can either call our toll free number 24 hours 7 days a week at

 (888) 882-6117


Submit your online application by clicking apply below and entering a few basic details about your business.

Top Considerations Before Applying for Financing in the Hospitality Industry

Before you can successfully borrow, you should ask yourself several key questions. They will guide you towards the best loan product to meet your borrowing needs.

1. Are you already an owner or are you looking to open or acquire a new hotel?

During 2020, many mom and pop hotels put their operations up for sale. One website currently lists 76 motels for sale across the United States, with prices ranging from $749,000 to close to $5 million. Reasons for selling include retirement or a desire to exit the industry, but they all represent an opportunity for a savvy small business owner.

If you’re looking to acquire an existing operation, the amount of money you need to put down or the percent of the purchase you have to fund through financing will influence the type of loan you need. You should likely apply for a large business loan or mortgage.

If you’re already in the hospitality industry, you have data available to inform borrowing decisions. You can predict cash flows and will know, for example, if you need to borrow to fund repairs on a tour boat or the purchase of a new transportation van.

Existing business owners have a history of credit card receipts and cash flows to include in a loan application. You could have assets to pledge as collateral, such as allowing the lender to file a lien against your property.

With a solid plan of how you will use the funding – whether it’s renovating rooms to attract new clientele or adding a tour time – you can demonstrate the increased revenues that the loan will bring into your business. Banks could look favorably on your loan application – assuming you’ve been profitable or have enough assets to offset a year of losses during the pandemic.

If you’re opening a new hotel or tourist attraction, or acquiring one for sale, it will be harder to qualify for a traditional loan. At a minimum, you’ll need a robust business plan and strong cash flow projections when you apply. You might have to pledge personal assets – such as investment or retirement accounts – to secure the loan.

Banks want to see how you plan on making money, the amount of capital expenditures involved in any expansion, and when you’ll turn a profit or break even. If you lack experience in the hospitality industry, they’ll be wary. Newer small business owners will find it harder to obtain a loan from traditional funding sources.

2. Why do you need the funds?

Opening a new hotel or offering a new attraction? You’ll have to locate a good building to lease or buy, and cover monthly rent or the mortgage while possibly renovating it. There will be upfront costs like buying golf carts or setting up a website advertising your tour guide services, and once you’re in operation you’ll have to cover utility bills and other fixed expenses before your first booking.

Renovating or expanding an existing operation? You could face many of the same costs.

Here are some of the most popular reasons those in the hospitality industry take out small business loans

  • Renovate their space to keep it fresh and clean for clientele
  • Expand their space or operations, adding a pool or fitness center
  • Add services, such as additional daily tours, charter boat runs, or stand up paddle boarding classes
  • Cover operating expenses during lean times

Knowing how you’ll use the funds dictates the type of funding and term that best fits your business purposes. It can also set your borrowing budget and dictate how much cash you need to fund the business plan.

3. What can you afford to borrow? 

Now is the time to create a budget for your business plan. After you’ve paid fixed expenses like rent or the mortgage and utilities, how much free cash flow is available to make loan payments?

Lenders base your monthly loan payment on the loan’s size and terms, such as a repayment period and interest rates. If you can’t afford the payment, consider scaling back your plans.

The business’s cash flows must be large enough to cover the loan payments – particularly if there is a delay between when you have to pay for any renovations and when the new investment generates revenues. When making a budget and determining what you can afford to borrow, include a plan to pay back the loan. And try to plan for the unexpected.

The contractor you hired to renovate the new space can’t start work until a month later than planned. The kayaks you bought are backordered and you have to cancel bookings. Make sure you have a fallback plan to make loan payments if there’s a hitch in your plans.

4. Will the project generate a profit?

How much revenue will your new hotel or bed and breakfast generate in the first year of operations? In year five? Will building a mini golf course in your amusement park generate $20,000 of annual revenues, but cost $10,000 to build and another $5,000 to operate? Before you borrow to fund an acquisition or project, you must know if it will make a profit.

Anytime you plan on borrowing to fund a small business venture its expected return should cover more than the loan’s cost – it should also generate more revenue for your business in the long run. Evaluating a potential project in the hospitality industry can get quite complicated if you must also consider the length of the tourist season, how the weather impacts your operation, and competition.  A simple expansion has many variables.

Before taking out a loan, crunch the numbers and determine if the project’s impact on your revenues will both pay back the loan and generate a profit. Consider the worst case scenarios, and how you might offset them. Maybe building a cover over the mini golf course could help you make money when it rains.

5. Establish the funding timeframe 

A loan’s term is the time you have to repay the funds. Shorter repayment terms tend to lead to a higher loan payment, but a longer repayment term isn’t always the way to go. It’s not a great idea to still be paying on a loan when you’re no longer receiving the benefits of what it funded.

For example, let’s say you’re taking out a $5,000 loan to cover the cost of four new paddleboards, payroll for the tour guide, and a new website to advertise your services. The paddleboards will be fully depreciated after one year. If you took out a five-year loan to finance them you would still be paying on the loan after they had no value (and already might need replacing).

For capital investments like vans or a renovation, apply a matching principle. The funding’s term should end when the project is complete, fully depreciated, or its benefits have been realized.

Maybe you need access to funds on a rolling basis – to cover payroll, help pay rent during a slow month, or to draw on for unexpected expenses. In that case, a line of credit would work best for your situation. A line of credit works like a credit card, though often with lower rates. You can draw on the funds as needed and only owe payments when you’ve borrowed.

6. What is your business and credit history? 

If you have poor credit, or your business has defaulted on a loan in the past, it will be harder to borrow now. Your personal credit score and the business’s credit history impact how easy it is to get funding and the rate and terms of the loan. Before you apply for loans or talking to a lender, pull a free copy of your credit report and check your credit score.

Borrowers with poor credit scores and a rocky business history will have a hard time obtaining funding from traditional lenders. Most banks prefer to work with borrowers who present less risk of default. After two to five years in business, and with a credit score above 750, you can likely obtain funding from a traditional bank.

Small business owners with less-than-stellar credit can still get funding, but will have an easier time and get funded faster with an alternative lender.  If you’ve only been in business a few months, or less than five years, and have a lower credit score, work with online and alternative lenders. These lenders specialize in working with borrowers that banks won’t consider.

Best Business Loans for the Hospitality Industry

The best business loan fits your funding and repayment needs. One of these options will be the best choice for your plans to succeed in the hospitality industry. 

1. Large Business Loans

If it’s time to invest in a renovation or acquisition, look into a large business loan. Borrowing amounts start at $50,000 and go up to $2 million. Because a large business loan is intended for a larger project it has a longer repayment period. 

To qualify for a large business loan you must have a credit score above 530, your business must bring in minimum monthly revenues of $10,000, and you have to be in operation for two months in business. Within as few as 24 hours you could have the funds needed to launch your project.

2. Merchant Cash Advance

Both hotels and tourist-related businesses depend on credit cards to accept payments. If you run a large amount of credit cards through your business, it could make obtaining the funding you need for working capital or short-term obligations easy with a merchant cash advance. When you take out a merchant cash advance, you sell a percentage of your credit card receivables to the lender and they collect on future sales. 

After taking out a merchant cash advance, repayment is taken from future credit card sales, which makes repaying the loan easy. It’s deducted from your cash flow in dollars and cents, not a large, lump-sum loan payment each month. If you have significant credit card sales and minimum monthly revenues of $8,000, you can apply for a merchant cash advance with a credit score as low as 500.   

3. Small Business Loans for Expansion

Is it time to add a pool or fitness center to attract new business? A small business loan for expansion could be the best loan product. They offer longer repayment terms and will lend in large enough amounts to fund the whole project. 

You can apply for a small business loan for expansion after just three months in business and a minimum credit score of 530 as long as you have $10,000 a month in revenues. 

4. Working Capital Loans

Working capital loans help hotel owners cover the costs of day-to-day operations like payroll or utility bills. These loans help with operational expenses. They keep the lights on – literally.

The underwriting process is faster than with a traditional loan since the underwriters base their funding decisions on bank deposits and monthly revenues. If you’ve experiencing a cash flow crunch during the off season, you could get funded in time to meet current obligations.

At Shield Funding, we fund working capital loans to business owners with credit scores above 650 after you’ve been in business for just two months. 

If working with traditional banks seems hopeless, it’s time to reach out to an alternative lender. Alternative lenders can best serve the needs of small business owners who have the skills and ideas to succeed but might not have the great credit score to work with a bank. After just a few minutes to gather the necessary paperwork you can apply online now! 


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