Financing Your Hospitality Business: 7 Options You Need to Consider

Financing Your Hospitality Business: 7 Options You Need to Consider

If you are thinking about launching a career in the hospitality industry, make sure your budget is ready to support your business concept. The hospitality industry is all about the complete satisfaction of the customer. In fact, this is its goal – satisfied customers that will return regularly to enjoy your services. For that reason, extensive planning of the finances should be done by the manager’s side in order to establish the company well and ensure the money that will run the company. 

As thinking about getting more money that can be used for improvement is a daily obligation of the CFO of the company, this text is intended mainly for this profile of employees. Here are seven viable options on how to increase the funding of your hospitality business. 

  1. Long Term Loans

The first and most popular option for every hospitality business beginner is the bank term loan. They are usually the most affordable type as it enables using it the longest. In addition, the bank will charge fewer fees than the rest of the commercial financing companies. You can use a bank loan for acquisitions, refinancing debt, buying real estate, working capital, and any other commercial use you can think of. 

  1. Line of Credit

This option is preferable for small business owners as they can have access to finances at any time they need. No further approval is necessary for the business owner to access and draw in money like it is the example with the long term financing by the banks. This advantage makes it very easy for small hospitality business owners to get their hands on money whenever they need it. 

  1. Unsecured Line of Credit

This line of credit doesn’t use collateral as the basis for giving finances, and it relies only on the business owner’s personal credit. This is a very attractive option as no collateral damage can be done with assets in ownership of the company. 

  1. Asset-Based Loan

The opposite of the unsecured line of credit; this type of loan is possible only in the company has assets on their balance sheets with decent equity to be used as collateral. Usually, the form of insurance is commercial real estate. 

  1. MCA Split

Hospitality business owners can use this option if they have poor credit or need financing very fast. It is a form of merchant cash advance where the merchant splits a percentage of their day’s credit card sales with the funder as a form of repayment.

  1. Customer Financing

In trying times, CFOs of companies think of unique ways to repay for debts or cover expenses. One of these ways is by turning to customers to participate in the funding by investing a substantial sum of money for a return of predetermined percentage that could be spent on the services.  

  1. Investor Pitch Deck

The investor pitch deck or also known as a start-up investor deck is a document that contains information about the business and why it is a good idea for investors to invest in it. It is a presentation of the opportunities for investors with crystalized ideas, strategy, and financial plans to convince investors to be a part of the company. 

The Bottom Line

Looking for finances to obtain a secure future for your hospitality business is not an easy thing to do. It would help if you were open to lots of possibilities and opportunities but carefully choose the right one for you. Not every plan will suit the needs of your business, and not every plan will give you the capital you are in need of. For that purpose, it is always recommended to consult an expert in the field because, as mentioned previously, money is a serious issue.