CPACE financing offers a unique capital solution for new hotel construction. PACE funding was designed to help businesses improve and construct new buildings. Additionally, repayment for this financing option is usually spread out over years. If you are building a new hotel, you should consider PACE financing to assist with construction costs.
CPACE Financing Can Help Reduce Costs
Constructing a hotel often requires large, up-front capital, so reducing costs is a priority. Traditional loan repayment depends on your profitability. Because these loans hinge on the risk that you won’t make enough to pay back the loan, they often come with higher interest rates.
By contrast, CPACE financing is tied to the value of your property. Paying back CPACE loans is very similar to paying your property taxes. For these reasons, it is typically easier for a lender to recuperate their investment in you. Therefore, these loans often offer lower rates. Hoteliers can reduce the overall costs of financing hotel construction with low interest PACE loans. CPACE financing can fund up to 20% of your property’s value, which equals savings overtime compared to 100% financing through a traditional loan.
PACE Loans Can Help Cash Flow During and After Construction
Since CPACE financing offers lower costs for initial capital, your cash flow may be more stable during and after construction. You repay this loan once a year as a line on your property tax bill. Repayment terms also tend to be longer than traditional loans. Therefore, your payments are typically in lower amounts and paid once a year. This can keep capital in your pocket until you get up and running. Therefore, PACE financing offers more stable cash flow during and after your hotel construction. Because this new construction financing typically costs less than traditional loans, you keep more of your profits overtime.
PACE Financing Can Be Transferred
Additionally, you can transfer your CPACE loans with sale of the property. This can be a major benefit for hotels in particular. Oftentimes, if a hotel becomes well-known, is in a good location, and is lucrative, a larger corporation may try to acquire it for their brand. If this happens with your hotel, you can transfer your CPACE financing the new owners. Therefore, you won’t be on the hook for repayment after you sell the property.
At Stonehill PACE, we are a direct PACE lender that specializes in commercial funding for new construction and major redevelopments. We can help you finance your new hotel construction or renovation project. Our team has the experience and relationships you need to handle all the aspects of your qualification process. Call us at (678) 823-9313 to learn more or to start on your hotel construction approval process. We are here to serve you.