Category Archives: Case Studies

Florida Refinance and Lower Payments

Our GRP Capital Team has closed a Florida hotel refinance, helping our client achieve more affordable, lower payments.

Originally, our client was paying over 11% interest on a previous loan. His new loan brought down the interest rate significantly. However, this was just one good part of the loan. Yes, this new loan includes more affordable monthly mortgage costs. But even better: GRP Capital was able to help structure the loan without our client incurring any fees, including SBA guaranty fees.

Finally, there was one other bonus to this loan. Like many of our hospitality clients, this hotel owner had an SBA Economic Injury Disaster Loan (EIDL). It was very important to our client to be able to retain this loan. The reason: the interest rates were so low and they were fixed. We worked with the lender and advocated on behalf of our client to retain and subordinate this EIDL. This meant that our client would continue making affordable monthly payments on the EIDL, without having to pay it down.

GRP Capital Managing Director Krishan Patel worked closely with the client’s family and our lender. Krishan states, “By closing on this loan, we lowered our client’s annual carrying cost. He is now better positioned for future growth plans. We hope to support him in his future endeavors. He’s setting achievable business goals. I expect him to continue to be profitable and to take on new projects in the near future.”

Refinancing for Lower Payments?

• Interest Rate: The interest rate is the most important component in monthly payments. An amortization schedule will clearly show what you can expect to pay.

Costs of Refinancing: Knowing the true costs of refinancing is critical. Closing costs can add up. We will help you determine if they are affordable for you. It’s important to understand how long you need to hold a loan in order to make the refinance a good decision. How many months of lower payments will cover these possible costs?

• Handling Your EIDL: If you have an EIDL, this is a very affordable loan. We will advocate for our clients to be able to retain the EIDL per the loan agreement. Typically, we will arrange for our clients to subordinate the EIDL.

Our GRP Capital team specializes in finding the right lender for each project. We save our clients time and money, as we research the best choices for their funding sources. Our experience allows our clients to find funding that is project-appropriate and will allow for sufficient cash flow. Whether you are looking to refinance, purchase or engage in construction, we would love to discuss your business plans with you. If you are considering becoming a first-time (or second or third time!) buyer, we can assist you.

Santa Rosa New Mexico downtown

New Mexico Return Clients Close Loan

Our GRP Capital Team has closed a fourth hotel loan for a treasured group of return clients.

These return clients were ready to purchase another New Mexico hotel. They had tried to source financing on their own, but came to us when they were dissatisfied with the results. Our team was able to work with a Community Development Corporation (CDC). This CDC was crucial in obtaining an SBA 504 loan. The terms of the loan were better than the terms from the various banks that the different partners had been trying to obtain in the marketplace.

GRP Capital Managing Director Krishan Patel led the team in sourcing and closing the loan. Our work benefited the borrowing group, whom we know well. This borrowing group had many partners, so sometimes that creates a cumbersome document collection process. GRP Capital’s involvement definitely saved the clients time and money. In addition, the team was able to step in to make last minute plans when one of the partners had to leave the country unexpectedly and needed to sign early and remotely.

Benefits to Return Clients:

• We Know You: Return clients’ files are archived in our systems. We know about your other businesses and retain documents that can be provided for new lenders, if appropriate.

You Know Us: We think we are pretty easy to get to know. However, we recognize that clients have to learn who we are and the GRP Capital Way. The learning curve is very smooth and future transactions are even smoother.

• We Know Which Lenders Will Appreciate Your Business Vision: When we’ve already closed a loan for you, we have also learned about you and your businesses. We know what aspects of your business need explaining and we also know about the strengths of the owners and managers. With this knowledge in our back pocket, it is easier for us to source appropriate lenders, who will want to loan money to our return clients.

Our GRP Capital team specializes in finding the right lender for each project. We save our clients time and money, as we research the best choices for their funding sources. Our experience allows our clients to find funding that is project-appropriate and will allow for sufficient cash flow. Whether you are looking to refinance or purchase or engage in construction, we would love to discuss your business plans with you. If you are considering becoming a first-time (or second or third time!) buyer, we can assist you.

Helen Georgia hiking trail mountains

New Georgia Hotel Loan

Senior Associate Ryan Dumas has helped his client close a Georgia hotel loan, using the SBA 7a program. The loan has fixed rates, which were very competitive in today’s marketplace.

Our Georgia hotel client was ready to take on a new business. To be sure, she has a great deal of experience in hospitality ownership and management. Therefore, this Georgia hotel loan was important to her and her family.

Ryan and our in-house underwriting and credit analysis team recommended an SBA 7a loan for a number of reasons. Firstly, the loan fit many of the 7a parameters. In addition, lenders are more willing to make hospitality loans when they come with an SBA guaranty.

Ryan was very pleased with the process. He stated, “We really are the leaders in the marketplace in closing SBA 7a loans. Our GRP team knows which lenders are interested in lending for hotels (not all banks are). This saves our clients a lot of time, not to mention money. I’m pleased to be part of the solution for these wonderful clients.” As for our client, she is busy working on improving the operations of her new hotel and said in an email, “Thank you for all your help obtaining the property. You were all great!”

Basic SBA 7a Information:

• What can a SBA 7a Loan used for? Limited to $5,000,000, borrowers can use this type of loan for purchases of businesses including equipment, renovation/construction and refinancing, too. Borrowers can even take out an SBA 7a loan for changes of ownership.

How does an SBA 7a differ from an SBA 504? In order to apply for an SBA 504 loan, borrowers must work with both a CDC (Community Development Corporation) and a senior lender. The CDC has to officially submit the loan to the SBA for approval. In addition, the CDC also approves the lender. Typically the CDC and the lender each have their own underwriting processes, which happen simultaneously. These extra steps typically lead to a lengthier closing. GRP Capital advises 504 loans when borrowers have sufficient time in their purchase sale agreement and for larger loans, too.

• Why do lenders like SBA loans? It’s all about risk! Lenders are by nature risk-averse. The SBA guarantees the majority of the SBA loan, which removes a great deal of the risk from the lender. So it’s a win-win for them. They get to have a loan on their books without the full amount of the risk they incur with conventional loans. GRP Capital is continuing to dialogue with our network of lenders. We think it’s important that lenders understand the many stable, profitable hospitality businesses that are out there.

Our GRP Capital team specializes in finding the right lender for each project. We save our clients time and money, as we research the best choices for their funding sources. Our experience allows our clients to find funding that is project-appropriate and will allow for sufficient cash flow. Whether you are looking to refinance or purchase or engage in construction, we would love to discuss your business plans with you. If you are considering becoming a first-time (or second or third time!) buyer, we can assist you.

Working together on SBA 504 loans

SBA 504 Loans for Hospitality

Once again, Ryan Dumas has helped a client close a hotel loan, this one in an East Coast resort location.

Ryan’s client, an experienced hotel owner, was prepared to purchase a hotel. This property was not too far from a current one he already owns. Our client knows this community well and had been keeping his eye on this hotel. He believed that the hotel had the potential to be even more profitable with strategic, experienced management, which he had the time and skills to provide.

Our in-house underwriting and credit analysis team recommended an SBA 504 loan to our client. Many lenders are still skittish about hospitality loans. However, the guaranty of one of the SBA 504 loans is enticing to a greater number of lenders. Working with a certified development company as well as a senior lender, our team was able to shepherd the loan through this complex process.

Our client has taken possession of his new hotel. His strong business skills should allow him to capture even more of this resort market. He remarked, “I know you worked very hard to process my loan.” During the loan processing, we spoke to him every day. So we are going to miss him while he’s busy with his new business!

FAQs on SBA 504 Loans:

• What can an SBA 504 Loan be used for? Purchase of a business or equipment as well as renovation/construction for an existing business. At this time, SBA 504 loans cannot be used for refinancing.

What is a Certified Development Company (CDC)? In order to apply for an SBA 504 loan, borrowers must work with both a CDC and a senior lender. The CDC has to officially submit the loan to the SBA for approval. In addition, the CDC also approves the lender. Typically the CDC and the lender each have their own underwriting processes, which happen simultaneously.

• How Complicated are SBA 504 loans? To be honest, there are a lot of moving parts. Essentially, you are applying simultaneously for two loans and closing them at the same time. Having GRP Capital to assist in the large numbers of document collections saves clients a huge amount of time and hassle. In addition, GRP Capital already has positive working relationships with many CDC’s and knows which lenders are willing to make hospitality loans.

Our GRP Capital team specializes in finding the right lender for each project. We save our clients time and money, as we research the best choices for their funding sources. Our experience allows our clients to find funding that is project-appropriate and will allow for sufficient cash flow. Whether you are looking to refinance or purchase or engage in construction, we would love to discuss your business plans with you. If you are considering becoming a first-time (or second or third time!) buyer, we can assist you.

We Did It! Fast Closing for two Midwest loans

Ryan Dumas‘ clients came to him with a challenge and a problem. How quickly could GRP Capital close not one, but two hotel loans?

It was a challenge, but our team, working together, was up to the task. In fact, we closed both loans in under 40 days. This was one of our fastest hospitality loan closings, and a source of great pride!

Our clients, experienced hotel owners, now own two new hotels. They were pleased with the results and the team approach to the various issues that come up during a closing. During one conversation, the client said, “My attorney was impressed with you. You really got quick results.”

Quick closings are not always possible. But sometimes they are absolutely required.

Reasons for a Fast Closing:

• Issues facing the seller: A property might come on the market due to a seller issue. They may have another business they want to fund with the proceeds. Sometimes, sellers just simply are ready to retire. While not every reason is truly a “crisis” requiring a quick closing, we try to expedite the process.

Competitive Bidding. Borrowers will sometimes feel tremendous pressure to close when sellers indicate there are other buyers out there. We try to caution everybody that super fast closings are not always possible (and are becoming rarer in both hospitality and construction loans). In addition, a loan in progress will almost always close more quickly than starting over with another buyer.

• Using proceeds from a 1031: Borrowers who are planning to use the proceeds from a previous commercial real state sale save taxes by quickly using the profits on a new purchase. This transaction, called a 1031 exchange, has a time limit between the sale and the new purchase. This can legitimately necessitate a quick closing.

What Can you do to Expedite Closings?

• Have your books in order: Borrowers need to have up-to-date personal financial statements. Their taxes must be filed or on extension. And the borrowers must have their hands on good, solid information about the business they are buying. Lenders must be assured, especially for a fast closing, that borrowers can make loan payments.

Put your CPA on speed dial. As a borrower, you will need multiple documents including up to date financials. If your CPA regularly submits monthly reports to you about other businesses you own, that’s awesome. If not, let your accountant know that you are in the loan process and may need accurate documents quickly. You may have to pay for this short-term additional work. We recommend doing so.

• Work with an attorney: Fast closings are almost impossible without good counsel. Contact your real estate attorney and include them in decisions and document creation. Use their advice as you create borrowing entities and attendant operating agreements. DIY is not great for fast closings. Solid legal advice is needed.

Our GRP Capital team specializes in finding the right lender for each project. We save our clients time and money, as we research the best choices for their funding sources. Our experience allows our clients to find funding that is project-appropriate and will allow for sufficient cash flow. Whether you are looking to refinance or purchase or engage in construction, we would love to discuss your business plans with you. If you are considering becoming a first-time (or second or third time!) buyer, we can assist you.

New Construction Loan for Liquor Store

Construction loans require special attention. They are somewhat complex and carry a modicum of risk. For these reasons, there is a smaller pool of lenders who make construction loans.

Our Georgia clients were experienced liquor store owners and operators. They had found a site in Georgia that looked promising for a new liquor store. After some delays securing local permitting, they were ready to secure financing.

Rick Patel worked closely with the clients. His advice was integral to securing general contractor approval. In addition, like most construction loans, this one also required multiple budget revisions. An accurate budget is critical, so the loan amount is sufficient for the entire construction process.

Important Aspects of Construction Loans:

• Clear, realistic business plan: Borrowers must assure lenders that they have a realistic business plan. That means they must have a strategy not only to build, but also to operate and manage a brand new business. Before even searching for a lender, spend the time to develop a coherent plan. Your plan should include a marketing analysis of the area, descriptions of competitors and why you think you can be successful. Sometimes GRP Capital will recommend that borrowers utilize a business consultant, who can produce a report that speaks the “lender language”.

Finding an appropriate general contractor. Banks will want to vet your general contractor, just like they underwrite you as a borrower. To do this, they will want to ascertain that the GC has relevant experience and strong finances. Typically lenders will interview and request documents from the GC directly, which GRP Capital helps to facilitate.

• Careful underwriting: Lenders want to make sure borrowers have the capacity to repay the loan. In addition, an appraiser determines both the value of the land or building prior to construction (as is) and when the project is completed. The underwriting and appraisal process will often find aspects of the budget that have to be revised. As a result, construction loans often take a bit long longer to close.

• Permission to Build: Depending on your locality, there can be some bureaucracy. Obtaining permits to build as well as permission to operate the business often requires approval at the city or county level. Understand the permitting process, including the timeline.

Our GRP Capital team specializes in finding the right lender for each project. We save our clients time and money, as we research the best choices for their funding sources. Our experience allows our clients to find funding that is project-appropriate and will allow for sufficient cash flow. Whether you are looking to refinance or purchase or engage in construction, we would love to discuss your business plans with you. If you are considering becoming a first-time (or second or third time!) buyer, we can assist you.

Texas Borrowers Move from Bridge Loan to Permanent Financing

Our Texas borrowers came to us last year, needing a bridge loan. We accomplished that.

Then we turned our attention to sourcing permanent, affordable financing. And now we accomplished that!

Looking back over the whole process reminds us of all of the challenges that can occur between origination and closing.

The First Goal: Secure Emergency Bridge Loan Financing.

Our clients had their eyes on an upper moderate hotel in South Texas. They had chosen their lender. But this story almost didn’t have a happy ending. Their lender dropped the loan in the middle of underwriting!

Lender dropout is a real problem and it is becoming more common in the current economic climate. And even more upsetting, the seller was adamant about the timeline: no extensions!

The buyers came to us in a bit of a crisis. They needed a loan fast!

Rick Patel and Krishan Patel worked closely with the client partnership group. First GRP Capital recommended a restructuring of the loan. As a result, traditional lenders would be more willing to finance it. But, being realistic, our team recommended a bridge loan. Bridge financing is a short term loan, designed to bridge the gap between undertaking financing and finding a permanent financing product. Bridge loans can be the perfect solution when the loan absolutely has to close, but the clients need more time to get everything right.

The Second Project: Permanent Financing

Once the bridge loan was in place, it was imperative to find permanent financing for our clients. Bridge loans are expensive. As a result, they are a stop-gap, temporary measure.

Ultimately, with some more time, we were able to secure a permanent loan for our clients. In the meantime, they even sustained some hurricane damage. This still did not stop the closing. However, it was a bit delayed while insurance companies reevaluated the situation.

The moral of the story is that hard work and patience and strong financial advice do win out in the end.

Bridge Loan Basics:

• Short-term financing that has to stay short-term. Bridge lenders are interested in short-term financing only. They want to know that clients have an exit strategy to obtain permanent financing.

Premium comes with a price. Bridge lending has a built in cost, usually a higher interest rate. This is another inducement to find permanent financing quickly.

• Be prepared for careful underwriting: Bridge loans are a somewhat riskier product for the lender, so lenders will work to protect themselves. They will conduct their own underwriting and it will be quite similar to a conventional lender’s underwriting protocol. Bridge lenders want to ensure that your loan will be able to be funded elsewhere pretty quickly. So they will look at your loan structure, your cash positions and your debt coverage before offering even this emergency financing.

Our GRP Capital team specializes in finding the right lender for each project. We save our clients time and money, as we research the best choices for their funding sources. Our experience allows our clients to find funding that is project-appropriate and will allow for sufficient cash flow. Whether you are looking to refinance or purchase, we would love to discuss your business plans with you. If you are considering becoming a first-time (or second or third time!) buyer, we can assist you.

Texas Buyers Needed Bridge Loan

Our clients had their eyes on an upper moderate hotel in South Texas. They had chosen their lender.

But this story almost didn’t have a happy ending. Their lender dropped the loan in the middle of underwriting!

Lender dropout is a real problem and it is becoming more common in the current economic climate. And even more upsetting, the seller was adamant about the timeline: no extensions!

The buyers came to us in a bit of a crisis. They needed a loan fast!

Rick Patel and Krishan Patel worked closely with the client partnership group. First GRP Capital recommended a restructuring of the loan. As a result, traditional lenders would be more willing to finance it. But, being realistic, they recommended a bridge loan. Bridge financing is a short term loan, designed to bridge the gap between undertaking financing and finding a permanent financing product. Bridge loans can be the perfect solution when the loan absolutely has to close, but the clients need more time to get everything right.

With a lot of work, this story had a happy ending. Our clients are the owners of a new hotel. They have short-term financing and are working with GRP Capital now to finalize their long-term financing needs.

Bridge Loan Basics:

• Short-term financing that has to stay short-term. Bridge lenders are interested in short-term financing only. They want to know that clients have an exit strategy to obtain permanent financing.

Premium comes with a price. Bridge lending has a built in cost, usually a higher interest rate. This is another inducement to find permanent financing quickly.

• Be prepared for careful underwriting: Bridge loans are a somewhat riskier product for the lender, so lenders will work to protect themselves. They will conduct their own underwriting and it will be quite similar to a conventional lender’s underwriting protocol. Bridge lenders want to ensure that your loan will be able to be funded elsewhere pretty quickly. So they will look at your loan structure, your cash positions and your debt coverage before offering even this emergency financing.

Our GRP Capital team specializes in finding the right lender for each project. We save our clients time and money, as we research the best choices for their funding sources. Our experience allows our clients to find funding that is project-appropriate and will allow for sufficient cash flow. Whether you are looking to refinance or purchase, we would love to discuss your business plans with you. If you are considering becoming a first-time (or second or third time!) buyer, we can assist you.

First Time Owner Buys Florida Hotel

Our client was ready to be a first time owner of a hotel.

He had already successfully owned and operated several fast casual restaurants. Now he was ready for the challenge and the potential opportunity of a Florida hotel.

Our client had been looking for properties in the west coast of Florida for a while. He knows that market well and it is close to where he lives. He was keeping his eye on several hotels that were rumored to be going on the market. When they became available, with our advice, he made a competitive bid which was accepted. Now, he just had to close by the seller’s timeframe.

A first time owner needs a little more attention. Rick Patel and Krishan Patel worked closely with the client, along with Keren Alpert, our loan processor. We advised him on setting up his corporation. We recommended that he bring in an experienced minor partner, at least at the beginning. We also were a resource in engaging legal counsel and insurance.

The partnership group coalesced and the loan closed. Our client told us, “Thank your team for all the help during the process”. His hotel is ready for the Florida high season.

Tips for First Time Owners:

• Stay within your budget. Just because you are ready to take on this new challenge, don’t feel pressured to spend more than you are able to. As exciting as new ownership is, affordable ownership is your goal.

Engage your attorney and accountant. First time owners are wise to assemble a team of professionals in addition to utilizing your GRP team. Do not try to save money by serving as your own attorney or accountant. Accountants needs to be on board to provide monthly updated financial reports for any businesses you own. Lawyers can help you in negotiating with the seller (and their lawyer), as well as prepare and review documents and make any necessary changes to agreements.

• Start working on obtaining insurance right away! Obtaining insurance is not super fast for new properties, especially in certain coastal areas. Particularly if you require flood insurance, begin that process as soon as your PSA (purchase sale agreement) is signed. Sometimes you may also need life insurance either because you are a key employee, or because of a collateral shortfall. It can take weeks to obtain the life insurance policy and assignment, so begin that process right away as well.

Our GRP Capital team specializes in finding the right lender for each project. We save our clients time and money, as we research the best choices for their funding sources. Our experience allows our clients to find funding that is project-appropriate and will allow for sufficient cash flow. Whether you are looking to refinance or purchase, we would love to discuss your business plans with you. If you are considering becoming a first-time (or second or third time!) buyer, we can assist you.

California Hardware Store Has New Owners

Our clients saw a hardware store for sale and were ready for a hardware store loan.

We were ready to make it work.

This was a brand new venture for our client partners. It was our job at GRP Capital to make the case for their past successes and their solid business plan.

An independent hardware store can be a competitive, challenging business. But in this smallish California town, the local hardware store was a gathering place for all things hardware and a variety of rentals. Our clients knew the area well as they already ran a successful independent hotel nearby.

Our clients worked closely with the sellers, retaining the management team and key employees. This will ensure continuity, something the lender looked at favorably. The lender was sufficiently confident in our clients’ business plans to offer an affordable loan. Ultimately, both the lender and the client were optimistic about the hardware store loan and the business’ chances for success.

Do You Want to Expand into New Business Ventures?

• Become a student in the new business. Just because you have been a customer of a business does not make you an expert. If you want to be a business owner, become an expert. Do your reading, talk with business owners, attend a local conference or even audit a class on the business at a local college.

Managing What you Have and What You Are Starting : We If you already have a successful business in another arena, how will you maintain your current obligations? Part of your business plan needs to include maintaining your current businesses. Lenders will want to see continuity in revenue stream and solid post-closing liquidity.

Our GRP Capital team specializes in finding the right lender for each project. We save our clients time and money, as we research the best choices for their funding sources. Our experience allows our clients to find funding that is project-appropriate and will allow for sufficient cash flow. Whether you are looking to refinance or purchase, we would love to discuss your business plans with you. If you are considering becoming a first-time (or second or third time!) buyer, we can assist you.