Category Archives: Closings

Georgia hotel courtyard in Marietta

Georgia Hotel Owners Secure Triple Success!

Our clients, Georgia hotel owners of three independent properties, achieved an impressive trifecta by closing three loans all within 36 days of each other. Working closely with our entire team, they refinanced two loans and closed a new one, freeing up SBA eligibility, and unlocking new opportunities.

The outcome was impressive: two refinanced conventional loans and the successful purchase of a new Georgia hotel. Additionally, they were able to restructure their ownership simultaneously.

Senior Associate Ryan Dumas expressed his enthusiasm for the project, stating:

My clients possess a deep knowledge of the Georgia hotel market. I’m thrilled that we matched them with a lender who shares their vision for independent hotels. The lender’s flexibility in incorporating all three properties into the deal was key. Because of this, the clients’ loans have extremely favorable rates and the most stable financing available.

What is SBA Eligibility and How Did it Affect These Georgia Hotels?

  • The Small Business Association (SBA) has multiple loan programs and guarantees. They each have their own eligibility standards.
  • This Georgia hotel took advantage of the SBA 7(a) program. There are also 504 loans and subsets of those which include Green loans.
  • SBA 7(a) loans have an upper limit, typically $5,000,000.
  • SBA also limits the amount of SBA debt each guarantor can have. In this instance, moving other loans out of the SBA program freed up eligibility. This debt load does not include prior EIDL’s (Economic Injury Disaster Loans).

Is your project a good fit for an SBA loan or combining an SBA loan with other loan types?

  • What is the size of the loan or loans you are needing?
  • Who will be guaranteeing your loans?
  • Do the guarantors have other SBA debt? If so, how much?
  • What interest rates and terms do you have on loans you are wanting to finance?
  • What interest rates and terms match your budgeting needs and your business plans?

Contact our team if you are considering SBA funding or questioning your eligibility. We can help you figure out the right mix of loan types for all of your business financing needs.

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.

Dallas skyline for Texas Hotel

Texas Hotel Owner Buys in Dallas Suburbs

Our client is a new owner of a Texas hotel, situated in a prosperous Dallas suburb.

Senior Associate Ryan Dumas and the rest of the GRP Capital Team helped get this loan over the finish line. Our Texas hotel owner was using 1033 exchange funds. As a result, there was a strict timeline. Ryan noted, “Hospitality acquisitions aren’t always easy these days. There are some specific components of hospitality loans that can slow things down. We worked hard to make sure nothing pushed us past the deadline. We were very aware of the tax savings for our client. We were particularly pleased that our lender was prepared to close in 32 days.”

Nearly every borrower wants their loan to close right away, and we try to accommodate. But exchanges like a 1031 or 1033 are special circumstances.

What Can You do to Close Your Loan More Quickly?

  • Start working on your insurance immediately. The economics of the insurance business are very tenuous right now. Particularly in flood and wind-prone areas (including a Texas hotel), nailing down insurance is critical. As soon as you are in the market for a loan, contact your trusted insurance agent. Obtain quotes.
  • Finalize your insurance decision. We understand wanting to save money. But getting your insurance finalized takes more than a day. When you have quotes, make a decision! Bind the insurance! Your loan papers cannot be signed without existing, bound coverage.
  • Communicate with your franchise if applicable. Find out when your agreement will be executed and released. Lenders require executed documents in escrow or on hand to close.
  • Survey? If the survey looks like it was handwritten by somebody in the 1970’s, the lender or title may likely require a new one. We have a network of third party vendors and can suggest a good surveying company to update or create a survey.
  • Hire an attorney. Commercial loans are a big undertaking. Attorneys can save you time and money.
  • Make sure your personal and business files are in good order and ready to submit. File your taxes, obtain updated financials, be able to produce business statistics.

Previous closing using 1031/1033 exchanges

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.

Lake near North Carolina hotel properties

Carolina Hotel Partners Refinance and Buyout

Loan financing can often accomplish multiple things. In the case of our North Carolina hotel owners, their two loans refinanced existing debt and also bought out partners.

Our clients came to us with two Carolina hotel properties. The two hotels, situated in different markets, had been jointly owned by the partners. However, each partner was now ready to take on full solo ownership of each hotel. The GRP Capital Team worked closely with our lender network, finding a lender who would handle both loans. Not every lender is willing to fund both a refinance and partnership buyout.

Our team was very happy to close both loans in quick succession, which required a fair amount of coordination.

Krishan Patel, GRP Capital Managing Director noted, “Partnership buyouts occur for lots of reasons. We worked very hard to structure this loan. As a result, we found lenders who were interested in our clients and their business plans. The new loans are stable and competitively priced. More importantly, the partners’ ownership is now in line with their business and personal goals.”

Our team also encouraged specialized help for our clients as they prepared for the appraisal process. The hospitality appraisal consultant worked directly with the appraisers, to make the case for the highest valuation possible. Lenders and appraisers are cautious right now, especially in the hospitality arena. Therefore, it is particularly important to approach an appraisal with data that can support maximum valuation.

Considering a partnership buyout?

  • Determine what the new ownership structure should be.
  • Decide who will be required (or wishes to) guarantee the loan.
  • Think into the future. Will any of the partners be interested in future SBA financing? If so, be sure that those partners are aware of their eligibility for future loans.
  • Engage an attorney to review and revise corporate documents including bylaws and operating agreements. These documents will need to be revised to show the desired new ownership structure.

More Information on the Appraisal 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. 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.

Gulf Coast of Florida

Useful Advice for Gulf Coast Hotel Purchase

Working closely with the GRP Capital Team, our recurring client purchased a new Gulf Coast hotel.

This purchase did have a few roadblocks, which sometimes happens!

The buyers put down hard money when they signed a Purchase Sale Agreement (PSA). However, during the underwriting process, the appraised value came up short.

Rick Patel, GRP President, stated, “Lenders and appraisers are cautious right now, especially in the hospitality arena. It can be tricky to negotiate with a seller when an appraised value is below their expectations. They can have a fixed idea of what they think their property is worth. In this instance, we worked closely with the borrowers and the broker to bring the PSA in line with the market value. This had to be done in order to close the loan. Getting to closing required tact and finesse.”

Advice for When Appraisals Come in Low

• Prevention first! GRP Capital works closely with borrowers to make sure the loan is appraised to show the full value. This sometimes means working with accountants to recategorize expenses. It also means combing financials to find addbacks. Addbacks are current costs will not be borne by the new buyer. Finally, we work closely with the appraisers to make sure they have a clear picture of the revenue potential of the property.

•Renegotiate Purchase Price: Ultimately, lenders will not loan money which exceeds the value of the property. It is also unrealistic, costly and time consuming to try to find another lender and hope that they will raise the appraised value. So, once a buyer has received a lower appraised value, they need to return to the seller to discuss the issue. Hopefully, the seller will be reasonable. It’s critical that the seller understands that a new buyer is not going to repair this problem. Indeed, a new purchase price is the only fix.

• Make Sound Business Decisions: A lower appraised value should cause the buyer to consider the project in a new light. Why have market values come up short? Can the buyer manage the property more profitably or will they face the same issues as the seller? And if the seller refuses to budge on price, a strong business owner has to know when to walk away.

More Information on the Appraisal 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. 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.

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.