Financing a hotel or motel in Texas is not like financing an office building or a strip center. Hotels are operating businesses, and most banks treat them that way — requiring two to three years of operating history, strong DSCR ratios, and a full SBA underwrite that can take 90 days or more. If you need to close fast, acquire a distressed property, or bridge to a perm loan while you stabilize occupancy, a hard money or bridge loan is often your best path forward.
At Commercial Loans of Texas, we work with hospitality investors across the state — from limited-service budget motels to extended-stay properties and boutique hotels. Here is how hospitality financing works in the private lending space and what you need to know before you apply.
Why Banks Turn Down Hotel Loans
Most conventional lenders are uncomfortable with hotels for a few key reasons:
- Short-term leases. Unlike an office or retail tenant on a 5-year lease, a hotel rents rooms by the night. Revenue is volatile and seasonally dependent.
- Operating expenses are high. Hotels require staffing, utilities, housekeeping, franchise fees (if flagged), and ongoing maintenance that eats into NOI.
- Franchise approval requirements. Many hotel brands require their own separate approval process before a new buyer can assume or re-license a flag, which adds weeks or months to a deal.
- STR restrictions. Post-pandemic, some lenders still apply tightened underwriting standards to short-term rental and extended-stay categories.
Private lenders and hard money shops are generally more flexible because they underwrite the collateral — the property — more than the operating business. If the real estate makes sense and the borrower has a credible exit strategy, a bridge loan can move forward even when traditional financing cannot.
Hard Money Hotel Loans: How They Work
A hard money hotel loan is a short-term, asset-backed loan secured by the hotel property itself. Terms typically look like this:
- Loan amount: $500,000 to $20 million+
- LTV: Up to 65–70% of as-is value, or 70% of purchase price (whichever is lower)
- Term: 6 to 24 months, with extension options
- Rate: 10–13% depending on deal quality, location, and LTV
- Points: 2–3 origination points
- Close time: 10–21 days
- No tax returns required: Underwriting is based on collateral, not personal income
Hard money hotel loans are commonly used to:
- Acquire a distressed or REO hotel property at auction or from a bank
- Refinance an existing hotel to pull cash out for renovations or working capital
- Bridge to a CMBS, SBA 504, or conventional loan while occupancy stabilizes
- Fund a conversion from an independent motel to a franchise-flagged property
Bridge Loans for Hotel Acquisitions and Renovations
A bridge loan serves the same basic function as a hard money loan but is often positioned for borrowers with stronger credit and cleaner assets. Bridge rates typically run 8.5–11%, terms run 12–36 months, and loan amounts can scale higher — up to $50 million for institutional-quality assets.
Bridge loans make particular sense when:
- You are buying a hotel that needs a property improvement plan (PIP) before a franchise will approve the flag
- You are refinancing a hotel that recently lost its flag and needs time to re-license
- Occupancy is below the threshold required for permanent financing (most conventional lenders want 80%+ for 12 months)
- You are waiting on a 1031 exchange identification period to complete
What Texas Hotel Markets Are Seeing
Texas has some of the strongest hospitality markets in the country. Houston, Dallas-Fort Worth, San Antonio, and Austin all post strong RevPAR (revenue per available room) numbers, driven by corporate travel, convention business, and domestic tourism. Secondary markets like Corpus Christi, Lubbock, and the Rio Grande Valley also show strong occupancy tied to oil field activity, military installations, and border trade.
Limited-service properties — think budget flags and extended-stay brands — have performed especially well in Texas because of the consistent demand from construction crews, traveling workers, and value-oriented leisure travelers. These assets are often the easiest to finance with private money because the business models are simple and the collateral is straightforward.
Loan Scenarios We Can Help With
Here are the types of hotel financing requests we handle regularly:
- Purchase of a 40-room independent motel in South Texas: $1.8M purchase price, 65% LTV, no franchise flag, close in 14 days. Borrower planned to add flag within 12 months and refinance into SBA 504.
- Cash-out refinance of a 120-room extended-stay hotel in Houston: Property valued at $8.5M, borrower pulled $2.2M cash out at 65% LTV to fund expansion of a second property.
- Acquisition of bank-owned limited-service hotel in DFW: REO property, bank required close in 30 days. Hard money closed in 18 days. Borrower stabilized occupancy and refinanced into CMBS 14 months later.
What We Need to Get Started
Unlike bank financing, hard money hotel loans require minimal documentation to get a quote and move toward close:
- Property address and brief description (flag, number of rooms, age)
- Purchase price or estimated value (for refinances)
- Loan amount requested
- Your exit strategy (refinance, sale, or stabilization timeline)
- Basic background on the borrower or entity
We do not require tax returns, income verification, or personal financial statements to issue a term sheet. If the deal makes sense on the collateral side, we can typically have a term sheet to you within 24 hours.
Ready to Finance Your Texas Hotel?
Whether you are acquiring a budget motel in Waco, refinancing an extended-stay property in San Antonio, or bridging a DFW hotel through a renovation and re-flag, we can structure a loan that moves at your speed. Call us at (877) 695-3034 or use the form below to get a quote in minutes.