The South Shields site, operated by High Street Hospitality, also used the funding to renovate its Latin-American restaurant, Loca, and on-site sports bar, Bar 52.
The funds also went towards refurbishing its events venue, the Bramhall Suite, which hosts weddings, conferences and banquets.
The initiative forms part of High Street Hospitality’s expansion plans to add ten hotels to its North East portfolio over the next three years.
Gary Forrest, chairman of the High Street Group, said: “The loan from Assetz Capital, who has been a valuable partner of the High Street Group, has been pivotal part in not only the refinance of an existing commercial mortgage, but also renovating the entire Sea Hotel.
“The work has allowed the hotel to trade at a higher level than before, benefiting the employees, the local community and tourists alike.”
The investment follows a £1.15m loan from Assetz Capital.