Funding for hotels and motels
Hotel and motel funding for PIPs, FF&E and the off-season
The cash cycle
Busy and slow months
Summer is the peak for most U.S. hotels and December and January are usually the slowest, though it varies by location, and ski, beach and business markets differ.
How money moves
Where the cash gets stuck
What owners use funding for
- Complete a brand-required property improvement plan (PIP)
- Replace PTAC units, a boiler or rooftop HVAC
- Refresh FF&E: beds, carpet and case goods
- Upgrade the property management system and door locks
- Cover payroll and taxes through the off-season
- Buy a property or fund a change of flag
What fits
Funding that suits hotels and motels
SBA loans
SBA 7(a) loans can fund acquisitions and renovations, and 504 loans finance buildings and long-life equipment, both with long repayment terms.
Equipment financing
PTACs, HVAC, laundry and door-lock systems secure their own financing, keeping fixed payments matched to their working life.
Term loans
For a smaller refresh, or a bridge while an SBA loan closes, a term loan gives a fixed payment and a clear end date.
Underwriting
What funders check in hotels and motels
- Occupancy, ADR and RevPAR trends
- Franchise agreement status and any open PIP
- Existing mortgage, its covenants and lien restrictions
- Deposits across a full year, to see the seasonal swing
- Occupancy and sales taxes filed and paid
Watch out for
Your mortgage may forbid other debt
Hotel mortgages often restrict additional debt and liens. An advance with a UCC-1 filing could put you in default on a much bigger loan, so read your loan documents first.
Leaning on online travel agencies
If most bookings come through online travel agencies, a drop in their rankings or a change in commission can cut revenue or margin quickly. Size payments to the direct and repeat business you can count on.
Off-season debits
A payment sized to August deposits can overwhelm a January. Size it to your slowest month, and prefer weekly or seasonal schedules.
In depth
PIPs, flags and deadlines
A PIP can cover everything from carpet and case goods to bathrooms, signage and technology. The brand sets the scope and the deadline, and missing it can put your franchise agreement at risk. That deadline is the first date to put next to any funding timeline.
Long-term money fits a PIP best, because the renovation pays off over years of better rates. SBA 7(a) loans can fund renovations and changes of ownership, and 504 loans finance buildings and long-life equipment, though 504 loans can't be used for working capital or inventory. Both take weeks of underwriting, so start as soon as the PIP scope is final. Our SBA guide explains the programs.
Equipment in a PIP, like PTACs, locks and laundry, can often be financed on its own through equipment financing, which shortens the list of costs the main loan has to cover. Get PIP bids early, since contractor and FF&E lead times can run longer than the brand's deadline allows.
How bookings decide when you're paid
Direct and walk-in guests pay by card and settle within days. When an online travel agency collects from the guest, it pays you later, often with a virtual card you have to charge. When the guest pays you directly, the agency bills you commission after the stay. Group and corporate accounts may pay on invoice terms.
That mix explains why a full weekend can show up as a thin deposit week. Funders read deposits, so a report of bookings by channel and a list of open invoices helps a funder see revenue that hasn't landed yet. Card chargebacks on disputed stays can also pull money back weeks after checkout.
Openbook Capital shows each offer's total payback, cost in dollars, payment schedule and estimated APR side by side. For a hotel, the schedule matters as much as the price, because weekly payments line up with channel payouts better than daily debits do.
Lodging taxes are not operating cash
Guest taxes land in your account with the room revenue and leave on your filing dates. Because they sit in the same deposits, a funder sizing an offer on gross deposits can count money that was never yours.
Back those taxes out before you judge whether a payment fits. If a daily debit ends up spending tax money, the next filing turns a cash squeeze into a tax problem, and unpaid taxes are among the first things a funder or lender checks.
The same goes for advance deposits on future stays and group bookings. That cash belongs to rooms you haven't provided yet. If your bookkeeping allows, hold guest taxes in a separate account so money you owe never looks like money you have.
Questions
Hotels and motels owners ask
Does a franchise hotel need brand approval for new financing?
Some franchise agreements require notice or consent for certain financing or liens. Check yours before you sign, especially for anything that files against the property or its revenue.
Can a motel with weekly guests get funded?
Yes, if the money reaches the bank. Extended-stay and weekly guests show up as regular deposits, but cash that isn't deposited can't be counted.
Is it better to finance FF&E or pay cash?
If cash is tight, financing FF&E over its useful life keeps reserves for the off-season. Compare the total cost of financing against the cushion you'd otherwise give up.
What if I just bought the property?
Funders look at history under your ownership; Openbook can usually help once you have 6 months in business and $10,000+ in average monthly deposits. Before that, the lender that financed the purchase is the natural first call.
Will a funder look at occupancy reports?
Some do, especially for larger amounts. Occupancy, ADR and RevPAR reports help explain seasonal deposits, so have your recent ones ready.
Other industries
Sources
- 7(a) loans — U.S. Small Business Administration (checked 2026-09-30)
- 504 loans — U.S. Small Business Administration (checked 2026-09-30)
One application, many funders
Know the cost. Then decide
Tell us what you need in about 3 minutes. We compare funders that fit and show every offer with its total payback, dollar cost, payment and estimated APR.
- About 3 minutes. No SSN and no bank login to start, so checking doesn't affect your credit.
- 4 months of bank statements. A specialist contacts you within 1 business day and asks for them through a secure link.
- You approve every funder before your file goes out. No cost to apply, and no obligation to accept.