Our GRP Capital client is the proud owner of an East Texas hotel. Our clients purchased the hotel with extra assistance from the team to take this loan across the finish line.

GRP Capital’s  Senior Associate Ryan Dumas and our entire team worked closely with the very capable clients. Our clients, experienced managers and owners, only needed a little bit of direction in order to undergo the vigorous SBA underwriting process. We helped with restructuring the borrowing entity, including designating appropriate personal and corporate guarantors. As a result, our clients could more easily source their equity injection in a way that pleased the bank and met with SBA approval.  

Upon closing the loan, Ryan Dumas stated, “I really respect these clients a great deal. They are experts in the Texas hotel business and reached out to us as experts in financing. We worked very diligently with them to set up the loan so that everybody was happy: the clients, the bank and the SBA.”

If you are thinking of obtaining a new loan, now is the time to get your paperwork together, so you can streamline the process from origination to closing.

Get Organized While You Look for a Loan:

• Make sure your taxes are up to date.  File your taxes or file your extensions. Lenders will require three years of tax returns, both personal and business. This includes affiliate businesses that you own 20% or more of (or which you manage).

• Monthly Financials are a Must: Even if your CPA typically only provides quarterly financials, during the loan underwriting process you will need to provide monthly financials. And be prepared: your financials will be updated at least once during underwriting. Be sure your CPA understands what will be required. We are happy to conference call with any of your business professionals to explain the process and what will be needed.

• Show Us Your Plans. What are your dreams for your business that this loan will allow you to embark on? What is the current budget and your future budget? How do you plan to market in the future? If you are buying a new business, what will you do that will improve upon the previous ownership?

• Be Careful with Your Money.  Lenders will need to see nice clean bank statements, both business and personal. So don’t spend large amounts of money or take in large amounts of money. Don’t take on new debt (new cars or houses, new credit cards) and please don’t check your credit. If you get into a situation (you’ve been in a car accident and don’t have a choice about buying a car), talk with us first about strategies to deal with the emergencies during the loan underwriting process.

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. If you are considering becoming a first-time (or second or third time!) buyer, we can assist you.

Many of our clients come to us seeking traditional financing. Some clients have loans that are owner financed or seller financed. These can be convenient loans, but can be a bit too personal; it can be difficult to owe money to friends and family. In addition, traditional financing offers greater stability, government guarantees and even lower rates.

The entire GRP Capital team worked together to close this Florida hotel. We assisted the client to access traditional financing.

However, transitioning to traditional financing does require a bit of effort.

Preparing for Traditional Financing: 

• Take Care of Title:  Traditional lenders want to make sure there are no “clouds on title”. This means that the borrower will clearly own the property and nobody can make a claim to a portion of it. Especially if a prior loan took place without going through title, potential borrowers must address this. Find a reputable title agent and ask them to run a preliminary title report. If there are issues that need resolving, hire a real estate attorney and begin to address them.

• Bolster the Appraised Value: The appraisal process is critical, especially for properties that were not recently officially appraised. Shail Madhav collaborated with our clients to prove the value of the company. They tweaked business plans and budgets and even worked together on what to say when the appraiser came to inspect the property. All of this paid off, as the clients could justify the value of their property, including the loan to value ratio and future debt coverage.

•  Show Your Finances: Banks require clear, well-structured financial statements. These statements should include both Profit & Loss statements as well as Balance Sheets. If you or your accountant have not been regularly producing these, now is the time to take action. Prepare financial statements for the current year and the previous one to two years. Make sure the balance sheets match up with any loan statements or debt that you have.

How our client benefited:

Upon closing the loan, GRP Capital President Rick Patel stated, “ We were very pleased to close this loan for our client. The new loan gave him a lower mortgage payment and improved his cash flow. He now has more secure financing with government guarantees. The previous financing didn’t include either title work or environmental assessment. As a result, we were anxious to take those on. Now our client has a clear title and a clear environmental assessment. These accomplishments also added to our sense of security. Finally, the loan closed in time for our clients to take advantage of the latest stimulus package.  

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. If you are considering becoming a first-time (or second or third time!) buyer, we can assist you.

Our clients have just purchased a South Carolina hotel. This partner group of first-time owners found an underperforming property and purchased it with very good terms. They utilized a 21% equity injection and their loan covered all closing costs and included hefty working capital.

Senior Associate Ryan Dumas was very happy for our clients. Ryan remarked, “These clients had done their homework and found a South Carolina hotel, which was a strong property. However, this property wasn’t cash flowing. We were able to demonstrate to the lender how our clients would better manage the property. I am proud of the loan that we procured for these clients. I know they will be able to turn this hotel around and make it much more profitable in a very short time.” 

When a Property is Underperforming

• Do Your Due Diligence: One of the benefits of using our GRP Capital team is that we look at all of the documents we can to figure out where management has gone wrong. We study the market conditions, competitor performance (sometimes through STR reports), financials, hotel statistics  and sales/occupancy taxes. Our team advises our clients to purchase only if we think the hotel has the potential to become more profitable. We also encourage our clients to limit overly large earnest money requirements during the due diligence period.

• Make a Solid Business Plan: Potential buyers of underperforming properties need to quickly identify ways they would manage better. How would you improve the condition of he property? Its marketing? Its rates? What changes would you make in staffing and purchasing? Sometimes the answer includes being onsite more as absentee ownership and management can allow properties to flounder.

• Plan to utilize working capital and reserve funds: Properties that are underperforming often have had deferred maintenance or possess a tired appearance. It is wise to have a slightly larger loan if it includes working capital and funds for a PIP. It also makes sense to have cash reserves for initial costs upon taking over ownership.

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.