Hotel and motel funding for PIPs, FF&E and the off-season

In depth

PIPs, flags and deadlines

A PIP can cover everything from carpet and case goods to bathrooms, signage and technology. The brand sets the scope and the deadline, and missing it can put your franchise agreement at risk. That deadline is the first date to put next to any funding timeline.

Long-term money fits a PIP best, because the renovation pays off over years of better rates. SBA 7(a) loans can fund renovations and changes of ownership, and 504 loans finance buildings and long-life equipment, though 504 loans can't be used for working capital or inventory. Both take weeks of underwriting, so start as soon as the PIP scope is final. Our SBA guide explains the programs.

Equipment in a PIP, like PTACs, locks and laundry, can often be financed on its own through equipment financing, which shortens the list of costs the main loan has to cover. Get PIP bids early, since contractor and FF&E lead times can run longer than the brand's deadline allows.

How bookings decide when you're paid

Direct and walk-in guests pay by card and settle within days. When an online travel agency collects from the guest, it pays you later, often with a virtual card you have to charge. When the guest pays you directly, the agency bills you commission after the stay. Group and corporate accounts may pay on invoice terms.

That mix explains why a full weekend can show up as a thin deposit week. Funders read deposits, so a report of bookings by channel and a list of open invoices helps a funder see revenue that hasn't landed yet. Card chargebacks on disputed stays can also pull money back weeks after checkout.

Openbook Capital shows each offer's total payback, cost in dollars, payment schedule and estimated APR side by side. For a hotel, the schedule matters as much as the price, because weekly payments line up with channel payouts better than daily debits do.

Lodging taxes are not operating cash

Guest taxes land in your account with the room revenue and leave on your filing dates. Because they sit in the same deposits, a funder sizing an offer on gross deposits can count money that was never yours.

Back those taxes out before you judge whether a payment fits. If a daily debit ends up spending tax money, the next filing turns a cash squeeze into a tax problem, and unpaid taxes are among the first things a funder or lender checks.

The same goes for advance deposits on future stays and group bookings. That cash belongs to rooms you haven't provided yet. If your bookkeeping allows, hold guest taxes in a separate account so money you owe never looks like money you have.