Helpful tips when applying for boutique hotel finance
Are you interested in growing your business through tailored finance?
The hospitality industry is ever-changing.
Every now and again you would like to grow your business.
Or you would like to get new equipment.
For example, the fridges you’ve been using no longer work.
Obtaining finance for upgrades or refurbishments is what your company needs. In today’s economy, choosing to re-decorate with your business cash flow is out of the question. Re-decorating is expensive. It’s advisable to rather borrow money from a financial provider. There are retail and hospitality finance available. Loans offer you the chance to get the money to grow your business, as well as allow you to make monthly repayments. Which is ideal, rather than having to pay everything back at once. In order for the bank to give a loan, you need to prepare yourself.
Here are a few tips for you before going to the bank.
Prepare and do your research
If you do your research, You have a much higher chance of the bank approving your loan. Make sure you have a plan. Know your story and know your numbers. When you realise you want to expand your business, put together a business plan which highlights your cash flow.
A bank wants to be reassured that it can give you the loan amount. Knowing that your company will be able to pay it back at its fixed rate is important.
How good is your credit profile?
As mentioned before, banks need reassurance. That’s why a good credit profile and track record will help you. If you have a good credit profile, it makes it easier to get a loan. A good credit record shows the bank that you’re trustworthy and that you will be able to pay back the loan.
Having a bad credit profile can affect your chances of getting a loan. If you have a poor credit profile, you might have to get a secured loan which could use your home as collateral.
Types of loans
When it comes to business loans options, there are a number of loans available, including the following.
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Long-term loans: This means it’s a loan that your company will need to pay over a longer period, usually a number of years.
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Short-term loans: Your company will have to pay back this loan after a shorter period.
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Equipment financing: This is a loan which is obtained in order to pay for equipment. The equipment will be collateral until you pay it off.
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A line of credit: These are loans which the company will receive on a yearly basis. The business will have to make sure they pay off these loans quicker than your long-term loan.
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Home equity loan: This would be a line of credit which will use your house as collateral. This gives you the ability you to borrow against it more than once.
Tip: In order for you to get approved for an equity line of credit. You would have had to have paid a large sum on your house. The value of your home needs to be more than the amount you owe.
Have a business plan
Banks need to see your company’s business plan. Banks need to see the summary of your company, your market, team and financials. It doesn’t need to be a lengthy document. You should also have a five-year plan outlining your goals and how your company is planning to pay back the loan.
Your business’ financial details
You need to give the financial details of your business. These include all the debts you are currently paying, past debts, bank accounts and investment accounts. These are important as it shows the bank whether your business can afford to repay this loan.
Your business’ financial statement
All your previous loans and current ones need to be on your financial statement. The company’s bank account, investment accounts and credit cards should also be included. Your financial statement should present your balance sheet as well.
Personal information of owners
As a business owner, you will need to give the bank your personal information. As well as your financial statements. Also include your home, vehicle, investment accounts, credit accounts, car loans and bond.
Information on the hotel’s Insurance
In the world we live in today, anything can happen. This is why it’s important for everything you own to be insurance, including your business. Insurance is there to defend your company from any lawsuits that may arise, as well as any physical damage to property and people.
Going about financing your hotel renovations might seem like a long process. But if you give the bank all the documentation, have a good track record and know exactly what you want, then it shouldn’t be difficult. Always make sure you’ve done your research and have chosen the best option for you and your business.