How To Get Funding For Your Travel Company?

December 13, 2022
Isabel Espinoza
8 min read

With great travel operations, come great expenses.

Finding the right funding for travel businesses is a normal practice that most business owners will need to go through at some stage during their lifecycle.

Perhaps you’re looking to scale up your operations, purchase new equipment, or just suddenly face an unexpected cost.

Regardless of the reason, you’ll need access to fast and easy funding, stat.

The trouble is finding the right funding solution that works for you. Commit to the wrong loan, and you could spend years paying off unnecessary interest. This could hold your business back more than the funding helped push it forward.

Let’s look at all the funding solutions available to travel businesses and how to choose the best one.

WeTravel Growth Capital: Funding for your Travel Business

What Funding Options Are Available For Travel Businesses? 

Whether you’re starting a new travel business or want to expand on your current operation, getting funding is a necessary task.

In order to achieve this, it’s important to understand what types of funding options you have available. Here is a list of funding options for travel businesses.

A Bank Loan 

A bank loan is one of the most common types of funding for travel businesses. There are many different variants of loans available, each with its own set of unique terms and requirements.

The major benefit of choosing to take out a bank loan is that its relatively accessible. As long as you can prove you have a reliable financial history, this is a widely available form of funding. Not only this, but the right kind of loan could work well for your business.

Of course, there are also some major downsides to this type of funding. Most notably, you’ll have to pay interest on your loan.

This can get expensive and turn your initial funding amount into a far greater sum. Paying off bank loans can also take a long time, which means it could be a major financial commitment for your business.

And not everyone can easily access bank loans that make sense for their business. If you don’t have the right background or credit history, you might not be able to access funding, or affordable funding, through a bank.

Small business loans also often need to be secured with an asset – which can make them a risky option.

Funding for travel business

Private Loans 

Much like bank loans, private small business funding providers exist. These types of loans are often easier to qualify for – depending on your circumstances.

Just like any type of loan, you’ll still have to pay interest. There’s also always some element of risk involved when you borrow money from a lender.

If you do opt for private funding, try to choose a solution designed specifically for travel businesses.

Venture Capital 

Another solution for business funding is to get angel investors involved in your business. In this case, investors put a sum of money into your business and want a percentage of business ownership and profits in return.

This is a good option for getting new businesses off the ground. However, it comes with the added risk of giving up some ownership of your company.

 Venture capital is also generally only offered for larger startup investments.

Grants 

In some areas, grants exist to develop the tourism sector. This is when a government agency or local authority supplies funding with the hopes of boosting tourism activities.

This is an effective way to acquire funding for travel businesses, as you don’t have to pay back the money.

However, travel grants are hard to come by. You’ll also need to show exactly how you’ll use the grant to boost the local government or authority’s goal. And of course, earning grants is incredibly competitive.

Credit Cards 

If you don’t want to take out a traditional loan from a bank, you could use a business credit card to help finance your travel business.

This has the same advantage of being relatively accessible, it does, however, come with high-interest rates and potentially long repayment periods.

Bootstrapping 

Finally, another option for funding travel businesses is to simply save up and finance it yourself.

This approach is ideal as you don’t end up owning anyone any money and still retain complete ownership of your business. No high-interest charges to pay and no long repayment periods.

However, there are some serious challenges when it comes to bootstrapping a business.

First and foremost, coming across enough money to finance a travel business is often impossible. You’ll need a large lump sum of money – something that most people don’t necessarily have.

Funding For Travel Business: Types Of Loans Available 

The main source of funding for travel businesses is to secure a loan. Before you start this process, it is crucial that you understand that not all loans are made equal.

Here are a few of the main types of business financing loans you should know about before you borrow any money.

Receivables Purchase 

A receivable purchase agreement (RPA) is a type of financing agreement based on a company’s accounts receivable. Simply put, this form of lending unlocks any cash that is owed to the business, which technically makes it an asset purchase.

Because a company receives financing capital in relation to its receivable balances, there is less risk attached to this kind of financing.

You can only use this option if you already have a travel business and need to expand it – this is not suitable for funding your startup.

Funding for travel business

Line Of Credit 

Taking out a line of credit is when you access a preset borrowing limit from a lender, which you can use at any time.

You can spend portions of the money as you need it, and repay the credit over time. Once the credit has been repaid, you can tap into it again.

Taking out a line of credit can come with expensive interest rates, it is, however, also a useful tool for tour businesses to help them access funding when they need it the most.

Term Loan 

A term loan is the phrase used for when you borrow a sum of money and repay it over a set period of time.

Term loans normally use an unfixed or floating interest rate that is added to the balance you need to repay.

This type of loan is used if you require funding for a single event or purpose, like starting your business or purchasing new equipment. Once the loan has been repaid, you can’t access the money again.

Equipment Financing 

Equipment financing is a special kind of funding solution for businesses that allows you to purchase equipment on credit. This could be through an operating lease or a hire purchase agreement.

You’ll only take out an equipment financing loan if you need to purchase high-value equipment.

If you need funding for your travel business for a very specific tool, then this is a suitable solution. Of course, this type of financing is tied to the equipment so you can’t use it for any other purpose.

Requirements And Timeframes To Secure Funding 

There are a lot of aspects to consider when it comes to securing funding for travel businesses. It’s critical to have a comprehensive understanding of all the requirements that exist for different types of funding.

If you need capital straight away, then some funding options may not be suitable.

Whenever you take out a loan, the lender will want to access your credit history and understand how safe or volatile you might be to borrow money. This will involve a hard credit check.

Depending on the type of loan, lenders may also need to see your financial statements to understand how your business performs and how much cash you have available.

This is important for understanding how much they can lend you and what type of interest rate they can offer. Some larger loans may also need to be secured to an asset.

The time frame to secure funding will differ depending on who the lender is and what type of funding you are applying for. If all of your documents are in order, the turnaround time for banks could typically be around a week. However, this will often take longer based on the specifics of the loan.

WeTravel Growth Capital: Smarter Funding for Travel Business 

WeTravel Growth Capital is one of the best solutions for travel business financing. With Growth Capital, travel businesses can gain fast and easy access to the capital they need to grow their business.

How Do You Apply?  

All you need to do is fill out a simple application. It can take as little as 15 minutes.

Applications are entirely free and they leave zero impact on your credit score. Applying is super simple, and you can get access to a wide range of funding options with a single request.

You can then review the loan offers with your dedicated funding advisor and select a solution that is most suitable for your travel company.

What Do We Offer? 

There is a wide range of financing options available. It varies from a Term Loan of up to $10,000,000, Receivables Advance for up to $750,000, Line of Credit option for up to $10,000,000 among other financing options that vary based on your business.

Who Can Apply? 

Travel businesses of all shapes and sizes can access the WeTravel Growth Captial facility. This is inclusive of tour operations, travel agencies, custom travel providers, retreat hosts, destination management companies, educational travel organizers, etc.

As long as your business meets the straightforward minimal requirements, accessing and applying for travel business funding couldn’t be faster or easier.

The minimal requirements are as follows:

  • A monthly revenue stream of $10,000
  • Been in business for a minimum of 6 months
  • A credit score of 550

What Is The Timeframe? 

You’ll receive the financing in as little as 24 hours, deposited straight into your business account.

Funding for travel business

What Is The Benefit? 

This option gives you the opportunity to fund initiatives that will ultimately help you grow your business.

You can make essential purchases, cover unexpected expenses, expand into new markets, and develop new partnerships.

Sit back and watch as the long-term impact of the investment takes effect.

Interested but have a couple more questions? Visit our FAQ page, alternatively, get a free assessment to apply and get the process started.

Conclusion 

When it comes to applying for funding for your tour company, there are a number of key aspects to consider, different loan options available, and a set of requirements your business needs to meet.

Before you commit to any kind of loan, it’s essential that you understand all of these options as it will help you compare interest rates and payment plans to find a suitable solution that works best for you as a tour operator.

Using a solution like WeTravel Growth capital can assist you with this process and make securing the right funding for your business more accessible.