Hotel Loan Without Security

India ranks among the top countries whose travel and tourism sector make a large contribution to the GDP. The hospitality sector of which Hotel Business is an important segment has seen massive growth in the recent past.  The present demand for hotel rooms is growing at 6% per year, but the supply growth is 3% per year.  The potential for growth of Hotel Business in India thus opens up a host of opportunities for lenders to extend loan for hotel construction in India and fund hotel related ventures.  Loan for hotel business in India is tailored to suit entrepreneurs who aspire to be a part of the growing market.

Prerequisite for Hotel Loans in India:

The Indian hospitality and tourism sector had a massive inflow of FDI of USD 10.90 billion during the period spanning from April 2000 to December 2017. While vibrancy of the sector has opened up opportunities, getting a tailored credit solution becomes crucially important. Hotel business has its own specific needs. Identifying the area for hotel business loan is one of the basic principles in opting for the right loan solution. The specific needs in very broad terms could be in the area of:

  • Refurbishment
  • Renovation
  • New Restaurant
  • New Business Center
  • Purchase Security Equipment.

Apart from the above, there are several expense areas in the hotel business that need a  provision of hotel project finance for smooth operations in this critical service industry.

  • Food and Beverages ingredients.
  • Hiring equipment, cleaning materials, housekeeping inputs etc.
  • Music and entertainment
  • Lighting, heating and fuel cost
  • Repairs, renewals, AMC cost etc.
  • Gardening and horticulture cost
  • Manpower and welfare cost
  • NOC, Insurance, License, Stationery, Administration and Finance Servicing charges.
  • Sales and marketing
  • Miscellaneous

With such a broad spectrum of expenses, following tips for the applicant shall ensure quick approval of business loans for hotel construction.

Important tips to consider for hotel loan

Market Feasibility

An important aspect is the location of the property. A place frequented by tourists or businessmen is more likely to generate profits.

Tenure of Loan

Longer the tenure, lower is the hotel loan interest rates.

Sound Plan

A sound business model is important to the lender featuring:

    • Current Performance

         

    • Future Projections

         

  • Documents to establish adherence to all regulations

Credit Score

Any rating above 750 is ideal for a hotel loan proposal

Personal Net Worth

Robust PNW will ensure your capacity to liquidate the loan

Features and Benefits of Hotel Loans:

This category of credit comes under the ambit of business loans. In India, the mainstay of funds for small and medium enterprises is still vested in the Banks and NBFCs. Of late there has been a spurt in the rise of Fintech Companies like Lendingkart on the horizon, which are basically Digital NBFCs rewriting the contours of business lending in India with innovative products. Let us check the features and benefits that offer an enterprise the necessary competitive edge in the specific business eco-system.

  • Customization: Tailored loans helps the business to grow, invest in infrastructure, plant and machinery and provide working capital for operations.
  • Quick Processing: We process loans super fast within a matter of 72 hours, provided the proposal is in order.
  • Absence of Collateral: Unsecured hotel loans India needs no collateral as security.
  • No Hidden cost: Loan processing is transparent precluding the imposition of any hidden charges.
  • Flexible Repayments: There are two options of repayment; either through EMI or Fortnightly.

Coupled with broad redeeming features, there are a host of benefits accruing out of hotel business loan.

  • Cash Flow: It streamlines the flow of cash and thus provides ample liquidity.
  • Ownership Remains Intact: The absence of collateral in this unsecured loan makes one free of additional worries.
  • Improved Credit Score: Accurate reporting to various credit rating bureaus helps enhance credit score integrity.

Eligibility Criteria:

The bare essentials defining the eligibility criteria of business loan for hotel purchase can be tabulated as under:

  • The business must be operational for an uninterrupted period of 6 months.
  • The turnover should be minimum Rs.90000 or more for 3 months preceding the loan application.
  • The business must not be included in the blacklist for finance.
  • The location of the business must not be in the restricted category list.

Documents Required:

Hotel loans can be extended to Proprietor, Private Limited Company, Limited Liability Company or Partnership Company. Accordingly, the documents required for the different entities are summarized as:

  • Address Proof of the business.
  • Business Registration Proof: Any of the following are accepted as valid:
  • Business Registration Certificate
  • GST Filing
  • TIN 7
  • Trade License
  • VAT Registration
  • PAN card of the Proprietor and Business / Company, if applicable.
  • Aadhaar Card of the Proprietor
  • Copy of Partnership Deed.
  • Bank statement for the previous 1 year.
  • ITR if the loan amount exceeds Rs.10L

How to get a loan for a hotel business in India?

The online procedure of loan application in Lendingkart can be summarized in the following simple steps.

  • Submission of Application: Invoke the appropriate tab in the portal and populate fields with personal, business, and proposed loan details to complete the process.
  • Upload Documents: Documents in the digital format is to be uploaded next.
  • Evaluation and Sanction: The application and submitted documents are evaluated and accorded sanction if found in order.
  • Disbursal: The loan amount is credited to the account.

Fees and Charges:

Fees and Charges to be paid for Hotel Loan

Rate of Interest

Hotel loan interest rates in India Starting from 1.25% per month

Amount of Loan

Up to Rs.2C – check with hotel loan calculator for quantum of loan eligibility

Processing Fee

2 to 5% Onetime

Pre-Closure Fee

Pre-closure charges are applicable as per the lender’s policy

Tenure

Up to 3 years

Repayment

In EMI or Fortnightly

Hotel Loan FAQs:

1. What are the types of Hotel Loans in India:

The different types of Hotel Loans offered to the borrowers in India are:

2. Can I get a loan to buy a hotel?

Yes, you can secure hotel financing through various channels, such as business loans for hotel purchases, hotel construction lending, or specific hotel loans. Lenders typically consider factors like your creditworthiness, business plan, and the hotel's financial viability when assessing eligibility. Explore loan options from banks, credit unions, and specialized hotel financing institutions.

3. What is the interest rate on the loan, and is it fixed or variable?

The interest rate on a hotel financing loan can vary depending on factors such as creditworthiness, market conditions, and lender policies. It may be fixed or variable. To determine the specific rate and terms for a hotel loan, it's best to consult with a lender specializing in hotel construction lending or loans for the hotel business. At LendingKart, Hotel loan interest rates Starting from 1.25% per month.

4. What is the loan term, and are there any prepayment penalties?

The loan term for hotel financing, whether it's for purchasing, construction, or business needs, varies but typically ranges from 5 to 25 years. Prepayment penalties may apply, so it's crucial to review your loan agreement for specific terms and conditions related to early repayments.

5. How does Invoice discounting work in India?

Loan to the extent of 90% of the invoice value is provided immediately to ensure liquidity.

6. What does Line of Credit Mean?

It is basically an Overdraft Facility where a borrowing limit is specified, and interest is charged only on the credit amount and not on the limit.

7. How does Advance against POS sales work?

The lender ties up with the POS service provider and based on the sales volume in the POS, an advance is furnished on future receivables.

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