Hotels business loans — usual loan amounts, terms and fees in the UK
Summary (quick answer): Hotel loan amounts in the UK typically range from around £50,000 for small B&B or refurb projects up to £5m+ for larger hotels or portfolios. Terms can be short (bridging: days–12 months), medium (1–7 years) or long (commercial mortgages: 10–25 years). Expect arrangement/facility fees (typically 0.5%–3% indicative), valuation and legal fees, possible broker or exit fees and interest costs that vary by product and risk. Complete a short enquiry to get matched to lenders and brokers for a free eligibility check — Get Quote Now.
Introduction
Whether you’re buying a 6‑room coastal guesthouse, converting a town centre building into a boutique hotel, or refinancing a multi-site group, hotel finance options in the UK vary considerably. This guide explains typical hotel loan amounts, the kinds of terms you’ll see, and the fees and costs that commonly apply — with practical examples and a checklist so you can prepare a strong enquiry.
Quick summary: Key takeaways
- Loan sizes: from ~£50k (small projects) to £5m+ (larger hotels/portfolios).
- Term types: bridging (short), medium-term business loans and long commercial mortgages (10–25 years).
- Fees to expect: arrangement/facility fees, valuation, legal, possible broker fees and exit charges.
- Smaller needs (FF&E, appliances) may be met by asset/equipment finance from £10k upwards.
- Get matched to lenders/brokers for a tailored quote: Free Eligibility Check.
What determines the loan amount lenders will offer?
Lenders price and size hotel loans according to a combination of property, trading and sponsor factors. Key considerations include:
- Property value and type: freehold generally favoured; leasehold can be acceptable but depends on lease length and covenants.
- Loan-to-value (LTV): many lenders express limits by LTV (eg 60–75% typical for mainstream), though specialist lenders may be flexible.
- Trading performance: historic occupancy, ADR (average daily rate), RevPAR and recent profit (EBITDA) influence underwriting.
- Forecasts & business plan: lenders expect realistic occupancy and revenue projections, especially for conversion or growth finance.
- Experience and management: operator track record reduces perceived risk and can increase available facilities.
- Location & asset class: seaside resort, city centre or motorway service sites are assessed differently.
- Planning and conversion risk: projects requiring permissions or structural work attract higher scrutiny.
- Security & guarantees: property security, personal guarantees and cross-collateralisation affect size and pricing.
Indicative LTV guidance is illustrative only; individual offers depend on lender assessment and current market conditions.
Typical hotel loan amounts
| Hotel type | Typical loan amount (indicative) | Common finance products |
|---|---|---|
| Small B&B / Guesthouse / Family-run (owner‑occupied) | £50,000 – £500,000 | Commercial mortgage, secured business loan |
| Boutique / Independent hotels (10–60 rooms) | £500,000 – £3,000,000 | Commercial mortgage, refurbishment loan, development finance |
| Mid-size hotels / conversions / expansions | £1,000,000 – £5,000,000 | Development finance, staged drawdowns, senior debt |
| Larger hotels / multi-site portfolios | £5,000,000 – £50,000,000+ | Specialist commercial lenders, institutional finance |
Specialist products also exist: bridging loans from around £50k for speed, development finance with staged draws for conversions, mezzanine or subordinated debt to bridge funding gaps. For small equipment or furniture purchases, asset finance can start from £10k upwards.
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Typical loan terms and repayment structures
Hotel finance comes in several term buckets. Which you use depends on purpose, speed required and exit strategy.
Our Business Finance Matching Process
Step 1
Complete Your Details
It takes just 1 minute on average to complete your business and contact details.
Step 2
We Match Your Business
With the best business finance broker or lender most suitable for your needs.
Step 3
You Get Free Quote + Advice
You receive a free quote along with complimentary expert financial advice.
It’s fast and free to get a quote from one of the UK’s leading finance brokers / lenders who will contact you directly with your quote/s.
Short-term (Bridging)
Duration: days to 12 months. Use: urgent purchases, auction wins, short-term cashflow. Repayment: interest-only or monthly interest with a final repayment on refinance/sale. Fast but generally higher cost.
Medium-term
Duration: 1–7 years. Use: refurbishment, fit-out, medium-term working capital. Structures vary: capital & interest, interest-only with a balloon, or monthly payments indexed to cashflow seasonality.
Long-term commercial mortgages
Duration: typically 10–25 years. Use: property purchase or refinance. Usually amortising (capital & interest) and the lowest-cost option if the hotel’s trading is proven and security meets lender requirements.
Development finance
Staged drawdowns aligned to construction milestones, usually interest-only during build and then refinance to a long-term mortgage on completion.
Mezzanine / subordinated debt
Used to top up senior debt where LTV or senior funding is limited. Higher cost and flexible terms; often repaid from refinancing or asset sale.
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Repayment styles include amortising repayments, interest-only with a final bullet payment, or revolving facilities for working capital. Examples: a purchase mortgage for a 30‑room hotel might be over 20 years with monthly capital & interest; a refurbishment bridging loan might be interest-only for 6–12 months.
Fees, costs and other charges you should expect
Alongside interest you should budget for a range of fees. Typical items include:
- Arrangement / facility fee: commonly 0.5%–3% of the loan (indicative).
- Broker or introducer fee: some brokers charge a fee (fixed or %).
- Valuation / survey fees: RICS valuation, specialist technical surveys for conversions.
- Legal fees: solicitor and lender legal costs — often £1,000–£5,000+ depending on complexity.
- Commitment / facility fees: fee on undrawn portions for some facilities.
- Exit / early repayment charges: may apply on fixed-rate deals.
- Other: EPC-related works, stamp duty (on property purchase), VAT on certain fees.
| Item | Amount (example) |
|---|---|
| Loan amount | £1,000,000 |
| Arrangement fee (1.5%) | £15,000 |
| Valuation & surveys | £2,500 – £6,000 |
| Legal fees | £2,000 – £6,000+ |
These figures are indicative and will vary by lender, loan size and project complexity. Always request a full fee schedule from any lender or broker you speak to.
Who lends to hotels — the lender landscape
The market includes:
- High-street banks — for larger, stable operations or refinance.
- Specialist commercial mortgage lenders — experienced with hospitality assets.
- Challenger banks and regional lenders — competitive for niche cases.
- Alternative & private lenders — fast decisions, useful for complex or time-sensitive deals.
- Development finance houses — for conversions and staged builds.
- Asset and equipment finance providers — for FF&E, catering equipment (from c. £10k).
- Mezzanine funds — to provide subordinated capital where senior debt falls short.
If you want lenders who specialise in hospitality, we can match you quickly — Free Eligibility Check. For more sector resources see our hotels business loans industry page on hotels business loans.
What lenders look for — quick checklist before you apply
Prepare these documents and facts to speed up a decision:
- Last 2–3 years’ accounts (or management accounts if recent change).
- Business plan with forecasts (occupancy, ADR, RevPAR) and assumptions explained.
- Proof of ownership/title and lease documentation (if leasehold).
- Project budgets, contractor quotes and timelines for refurbishments.
- Planning permissions and licences (HMO, alcohol, food, etc. where applicable).
- CVs or track record of operators and management.
- Personal guarantees and director credit details (if required).
Have these ready — Start your enquiry.
Short case studies (illustrative)
Case 1 — Coastal B&B purchase
Purchase of a small 6-room seaside B&B for £350,000. Typical outcome: commercial mortgage of £250k–£300k over 15 years (capital & interest), arrangement and legal fees applied. Lender: regional commercial mortgage specialist.
Case 2 — 50‑room refurbishment
Conversion and refurbishment of a 50-room town hotel. Typical solution: development finance with staged drawdowns totalling c. £1.8m, interest-only during works, refinance on completion to a longer-term mortgage. Valuation and technical surveys were required.
Case 3 — Seasonal cashflow bridging
Short-term bridge of £120k to cover seasonal wage/inventory gap. Duration 3–6 months, higher short-term cost but fast completion; repaid on receipt of season revenue or refinance onto a business loan.
Our Business Finance Matching Process
Step 1
Complete Your Details
It takes just 1 minute on average to complete your business and contact details.
Step 2
We Match Your Business
With the best business finance broker or lender most suitable for your needs.
Step 3
You Get Free Quote + Advice
You receive a free quote along with complimentary expert financial advice.
It’s fast and free to get a quote from one of the UK’s leading finance brokers / lenders who will contact you directly with your quote/s.
These are illustrative examples only; each deal is unique and depends on lender assessment.
How to choose the right finance for your hotel
Decide based on speed vs cost, required loan term, security you can offer and your exit plan. If you need fast funds for purchase use bridging; for long-term buy-and-hold use a commercial mortgage; for conversion use development finance with staged draws. Get at least two quotes and discuss covenants, early repayment charges and lender experience in hospitality.
How UK Business Loans helps
UK Business Loans connects hotel owners and operators with lenders and brokers who specialise in hospitality finance. Complete a short enquiry — it’s not an application, just the information lenders and brokers need to assess suitability. Our service is free and no obligation. Once you submit, relevant lenders/brokers can contact you with tailored quotes, often within hours.
FAQs
How much can I borrow for a hotel in the UK?
Indicative ranges: small guesthouses £50k–£500k; mid-size hotels £500k–£3m; larger hotels and portfolios £5m+. Final amounts depend on valuation, trading, security and lender criteria.
What credit profile do hotels need to secure finance?
Requirements vary. Strong historic trading and an experienced operator help, but alternative lenders may consider weaker profiles at higher cost. Documented forecasts and a credible business plan improve chances.
How long does hotel finance approval take?
Speed depends on product: bridging can complete in days–weeks; commercial mortgages often take 6–12 weeks; development finance depends on due diligence and project complexity.
Are there special loans for hotel refurbishments?
Yes — development finance and refurbishment loans with staged drawdowns are commonly used. Some lenders will offer interest-only drawdowns during construction.
What are typical arrangement fees?
Arrangement fees commonly range from around 0.5% to 3% of the loan (indicative). Always request a full fee schedule.
Is UK Business Loans a lender?
No — UK Business Loans introduces businesses to lenders and brokers. Completing an enquiry does not commit you to a loan.
Still unsure? Get a tailored quote
Final summary & call to action
Loan sizes, terms and fees for hotels vary with property type, trading, security and lender appetite. The fastest way to understand what you may be offered is to complete a short enquiry so we can match you with lenders or brokers who suit your project. It’s free and no obligation.
Compliance & privacy
UK Business Loans is an introducer and does not lend money or provide regulated financial advice. Completing an enquiry is not a loan application — it provides information lenders and brokers need to assess your options. Submitting a form does not affect your credit score. All information is treated confidentially — see our Privacy Policy and Terms.
1. How much can I borrow for a hotel in the UK? — Hotel loan amounts typically range from around £50,000 for small B&Bs and refurb projects up to £5m+ for larger hotels or portfolios, with final limits set by valuation, trading and lender criteria.
2. What types of hotel loans and finance are available? — Common products include short-term bridging, medium-term business loans, development/refurbishment finance with staged drawdowns, long-term commercial mortgages, mezzanine/subordinated debt and asset/equipment finance.
3. How long does it take to arrange hotel finance? — Timing varies by product: bridging can complete in days–weeks, commercial mortgages often take 6–12 weeks, and development finance depends on project complexity and due diligence.
4. What fees should I expect when taking a hotel loan? — Expect arrangement/facility fees (typically c. 0.5%–3%), valuation and legal costs, possible broker/commitment fees and exit or early repayment charges which vary by lender and product.
5. What loan-to-value (LTV) can I expect on a hotel property loan? — Mainstream lenders often lend around 60–75% LTV for hospitality assets, though specialist lenders may be more flexible based on location, trading and security.
6. Can I get finance for hotel refurbishments or conversions? — Yes — development and refurbishment finance with staged drawdowns and interest-only periods during works are commonly used for conversions and fit-outs.
7. What documents and information do lenders typically require for a hotel loan? — Prepare 2–3 years’ accounts or management accounts, a business plan with occupancy/ADR/RevPAR forecasts, title or lease docs, project budgets, planning permissions and operator CVs.
8. Will submitting an enquiry through UK Business Loans affect my credit score? — No — completing a free eligibility enquiry with UK Business Loans does not affect your credit score; credit checks are only carried out later by lenders if you progress.
9. Is UK Business Loans a lender or does it charge for its service? — No — UK Business Loans is a free introducer that matches you to vetted lenders and brokers; it does not lend money or provide regulated financial advice.
10. Can start-ups or businesses with poor credit get hotel finance in the UK? — Yes — some lenders and alternative finance providers specialise in start-ups or imperfect credit profiles, though offers may carry higher cost, increased security or personal guarantees.