Category Archives: Commercial

The Government Shutdown and Your Loans

The government is currently “shutdown”. How does this affect your current and future loans?

Current loans and the government shutdown:

  • If you have current loans with government agencies like the Small Business Administration, the SBA is still servicing these loans.
  • You can continue to make payments and can even make some changes (like in ownership). But you cannot modify any loan amounts at this time.
  • Please be sure that you continue to keep your EIDL loan current, even during the shutdown, as this affects your ability to seek future financing. You can use this link to confirm your EIDL status: Check here

Trying to Get a New Loan during the Government Shutdown?

  • If you are in the middle of an SBA loan application and your lender pulled the PLP number, your loan should not be delayed. The PLP number is an SBA-specific loan number and provides pre-approval status.
  • If you don’t yet have this pre-approval, your loan will be paused.
  • However, your lender will continue to underwrite your loan. You should continue to submit all requested documents so you are making progress.
  • But the SBA will not underwrite or approve new loans during the government shutdown.
  • If you are seeking financing because of a maturing note, we urge you to contact your current lender. Explain that you may need an extension because of the shutdown, which is beyond your control.
  • If you do obtain an extension, be realistic and patient. Even when the government shutdown ends, approvals will not begin immediately. There will be a backlog of work. Allow for a longer approval process.

GRP President Rick Patel and Managing Director Krishan Patel both have worked through government shutdowns before. They know that they can be frustrating, but with patience and planning, loans cans still close, even if slightly delayed. GRP Capital can help you as you negotiate with current lenders, satisfy sellers and guide you through the process.

Whether you’re purchasing, refinancing, or building from the ground up, our extensive network of lenders ensures you’ll find funding that aligns with your goals and cash flow needs.

Here’s what sets us apart:

  • We save you time by researching and identifying the best funding options for your project.
  • Our expertise spans various loan products—including non-recourse loans, SBA loans, bridge loans, and conventional financing—so you can navigate even the most complex transactions confidently.
  • Beyond lending, we provide strategic guidance on operational decisions that drive long-term business success.
City business district

Explaining the SBA 504 Debenture Process

What Does it Mean and How does it Work?

A debenture is really a fancy word for a special kind of bond. It is an “instrument” created by a lender to raise capital. Lenders create a debenture and are in first position to be repaid. This debenture is bought and sold on financial markets.

Debentures are an integral part of the Small Business Administration (SBA) 504 loan program.

Here’s how the SBA 504 program with Debenture works:

  • There are three entities that fund the loan: a senior lender, a Certified Development Company (CDC) and the borrowers themselves.
  • The Senior lender provides typically 50% of the funding through the first mortgage. Their loan is in the form of a bridge loan, because it bridges the gap while the full funding is underway.
  • The CDC provides a second mortgage loan for a large chunk of the loan (around 40%). This portion of the loan is guaranteed by the SBA.
  • CDC’s are not traditional lenders. They do not have depositors or customers in the same way. So, they raise funds through creating the debenture and selling it to investors. This debenture is 100% guaranteed by the SBA, and is considered a very safe investment.
  • The borrower provides a modest equity contribution (typically 10-20% of the loan)

Advantages of an SBA 504 program with a Debenture Component

  • Lower down payment/equity injection
  • Competitive fixed-rate financing for the life of the loan
  • Long repayment periods (up to 25 years)
  • Affordable payments as a result of the loan repayment periods, which impacts cash flow immediately

Timeline of an SBA 504 loan from start to Finish:

  • First, you have to select both a senior lender and a CDC. This is where GRP Capital’s expertise is the most critical. We have the experience and the vast lender network to help find both a lender who is willing to be in the senior position as well as an appropriate CDC.
  • The senior lender and CDC coordinate so they agree on the loan structure and details.
  • Once the senior lender and the CDC indicate their willingness to find your project, then dual underwriting commences. Borrowers work closely with our processing team to provide information and documents to both the lender and the CDC simultaneously.
  • Both the senior lender and CDC officially approve the loan through their loan committee sturctures.
  • The senior lender sets a closing date! The senior lender takes lead in creating documents, and agrees to a a place and time for closing. A title company, escrow and attorneys are also working on your behalf.
  • The first loan closes: borrowers take possession of their new property, and funding for other costs begins (like construction and renovation).
  • The borrowers begin making payments on the first loan.
  • Now the creation of the debenture occurs. The debenture sale occurs around 30-60 days after the first closing. That’s why a bridge loan is necessary.
  • After the CDC receives their funds from the sale of the debenture, they pay off the bridge loan in full. They then create their own closing documents and a second closing takes place.
  • The permanent 504 loan is fully financed.
  • The borrowers now make payments on the final permanent loan.

Why Should I Consider an SBA 504 loan?

  • Your project is more attractive with an SBA guarantee, especially for senior lenders.
  • The long terms and low rates are important to your business plans and projections.
  • You are purchasing a building or a business OR
  • You are refinancing and/or consolidating qualified debt OR
  • You are renovating or involved in construction OR
  • You are purchasing long-term machinery and equipment with a useful remaining life of a minimum of 10 years.
  • You do not need financing for working capital, as that is not an eligible 504 component.

Whether you’re purchasing, refinancing, or building from the ground up, our extensive network of lenders ensures you’ll find funding that aligns with your goals and cash flow needs.

Here’s what sets GRP Capital apart:

  • We save you time by researching and identifying the best funding options for your project.
  • Our expertise spans various loan products—including non-recourse loans, SBA loans, bridge loans, and conventional financing—so you can navigate even the most complex transactions confidently.
  • Beyond lending, we provide strategic guidance on operational decisions that drive long-term business success.
Loan calculation

Check Your EIDL Status: Your Future Loans May Depend on It!

What is your EIDL Status?

During the onset of the COVID pandemic, many business owners took advantage of low cost loans offered by the Small Business Administration (SBA), called Economic Injury Disaster Loans or EIDL. These were long term loans at a very low interest rate, intended to keep businesses operating.

If you have an EIDL on the books, it is critical that you are making the regular monthly payments. Even more critical is that every person who is even a partial owner in a business with an EIDL must confirm that their loan is current. You can use this link to confirm your EIDL status: Check here

GRP President Rick Patel and Managing Director Krishan Patel both have worked closely with clients whose EIDL status was not current.

Rick mentions, “There is almost nothing that is more detrimental to future loan eligibility than having an EIDL that is not current.”

Krishan states that responsible business people “must be proactive and check on any EIDL that has their name attached” before seeking out future financing.

What to Know and Do about your EIDL Status

  • Make sure you keep a current list of every business that you own (fully or partially) in which you received an EIDL.
  • The SBA portal can be utilized to check on the status of each EIDL loan. However, if there have been multiple partners or owners of a business that sought out a loan, you need to determine who set up the portal and the login information (user ID and password).
  • Within the SBA portal, you can see if the loan is current or not.
  • If your EIDL status is not current and shows either a default or even worse a charged off status, you must address this right away.
  • You cannot obtain future SBA loans (including 7(a) and 504) if your EIDL status is anything but current.
  • Please allow sufficient time to repair your EIDL status. First, find out the amount needed to get your loan current. Then continually communicate with the SBA to ensure that the portal status changes.
  • The SBA portal allows you to download EIDL documents, which might be requested by lenders, particularly the loan agreement.

Best business practice tip: Maintain Business Debt Schedules

  • Maintain a business debt schedule for every business you own (even if you are even a partial owner).
  • Each business debt schedule should list every loan for this business, the monthly payment, the date of the loan and when it will mature, the interest rate, the original loan amount and the current balance.
  • For real estate mortgages, also include the original cost to purchase the property and the current market value (your best estimate).

Whether you’re purchasing, refinancing, or building from the ground up, our extensive network of lenders ensures you’ll find funding that aligns with your goals and cash flow needs.

Here’s what sets us apart:

  • We save you time by researching and identifying the best funding options for your project.
  • Our expertise spans various loan products—including non-recourse loans, SBA loans, bridge loans, and conventional financing—so you can navigate even the most complex transactions confidently.
  • Beyond lending, we provide strategic guidance on operational decisions that drive long-term business success.

Lending Workout Plans: Rick Patel and Krishan Patel Talk with Lenders at LendingCon

LendingCon, which brings together a diverse group of lenders, has just concluded.

GRP President Rick Patel and Managing Director Krishan Patel both participated in a seminar called “Lending Workout Plans.” They discussed defaults, forbearance and loan maturity.

Here are some of the key points of their remarks:

Market Conditions Affecting Lending Workout Plans

Q: What’s happening in the borrowing marketplace in the last 12-18 months?

A: Borrowers are showing confidence, and anticipate interest rate reductions in the next several years. On the other hand, the lending market has tightened up in several sectors, particularly hospitality. Some borrowers are exploring private credit, when possible. In addition, business operators are keeping an eye on inflation, which is “sticky” right now. As a result, entrepreneurs are restructuring and monitoring costs.

Q: How common are lending workout plans?

A: Defaults and lending workout conversations are becoming more common. This is particularly the case in distressed markets, like San Antonio, Austin, the Northeast and even certain Florida locations. Higher leverage clients are facing the greatest risk. And borrowers with maturing loans can struggle to find financing. There are delinquencies in several businesses: lodging, multi-family and office space. But we are heartened that many owner-operators are turning to lending workout plans rather than delinquency.

Lending Workout and Early Interventions

Q: What signs indicate that a loan is headed towards trouble?

A: Right away, we look for declining revenues. These start a cascade of problems including dipping into reserves. Then a business will start to exhibit operational indicators of distress, including poorer customer experience, decreased employee satisfaction, etc. If these issues don’t resolve, the issues magnify: franchise payment delays, payroll struggles, continued depletion of any cash reserves. And then finally, you will see inability to service debt.

Q: What should borrowers do when they feel their loan is at risk?

A: Borrowers should initiate open communication with lenders early, ideally two to three months before operational cash flow issues arise. Borrowers should share detailed cash flow projections and budgets. It’s critically important for borrowers to start this process before the first payment is missed. Once a loan is in default, the lender has already lost trust in the borrowers.

Q: What information do lenders need to create a lender workout plan? 

A: Solid information about due dates for big bills like insurance, taxes and franchise fees is critical. Absolute honesty about total debt (especially debt taken on after a mortgage) is also crucial. Finally, realistic projects and budgets are a must.

What should borrowers avoid doing? 

  • Don’t wait to talk to your lender.
  • It’s a mistake to over-leverage during periods of instability.
  • Do not continue to borrow funds from family or other sources to sustain a declining asset.
  • Bad business decision: expanding operations despite negative financial trends.
  • Lacking a concrete recovery strategy could be distrastrous. Don’t rely on hope. Take action instead.

What are some possible lender workout plans?

  • Deferments and interest-only periods can offer relief. However, most lenders will not offer this assistance if a payment has already been missed.
  • Greater lender control, like requiring CD reserves or requirements for achieving and maintaining certain debt coverage ratios.
  • Loan modification, often easier to accomplish with SBA loans.
  • Be aware that lenders can be constrained in their workout plans by regulatory pressure and their own institutional rules.
  • Private credit can be enticing in certain situations, but it comes with a price.

The State of Commercial Lending: A Conversation with GRP Capital Management Team

It’s a New Year and time to think about new beginnings, new ventures and new business plans. 

We thought it would be a good time to check in with our GRP Capital Management, President Rick Patel and Managing Director Krishan Patel. Let’s find out what their take is on the economy and the state of commercial lending. Check in with us if you have follow-up questions. We would love to hear your business plans and our team of experts is ready to consult with you.

Here is our conversation:

Q: What are the best ways to deal with rising interest rates while seeking financing? 

Krishan: Although borrowers may not have direct control over interest rates, they can work in their favor by reducing the leverage of their transactions. With a potential recession on the horizon, banks will be under close scrutiny by regulators, leading them to prioritize making safer loans. As a result, lenders may be more willing to offer reduced rates to borrowers who are willing to take on more risk or offer a banking relationship. Banks are interested in offering incentives to borrowers to choose their institution. 

Q: What measures should business owners be taking during these times of higher interest rates? 

Rick: I tell all our clients to be strong managers. Focus on controlling expenses as much as possible. You may want to reach out to your lender. Keep them informed if you have any hardship with your interest rate. It might be the time to discuss modifying your rate if it’s workable.

Krishan: Clients also need to be watching carefully how rising interest rates are affecting their bottom lines. Interest rate increases can have a ripple effect throughout the supply chain, as companies may need to raise their prices in response. As an end seller or service provider, it is important to consider these changes. Adjust prices strategically to maintain your margins and remain competitive in the market. It is also essential to move levers with conviction, rather than reacting to changes haphazardly or without a clear plan.

Commercial Lending Options

Q: Are there any loans out there right now that can actually come down in rate or allow for earlier refinancing? 

Krishan: Conventional loans offer more flexibility in terms of interest rates and prepayment options, but they can be more difficult to qualify for. On the other hand, government-guaranteed loans may have less flexibility in terms of prepayment options, but they may be easier to access for some borrowers.

Rick: The borrower’s financial picture is really critical. A strong borrower has the leverage to find financing options through other sources, for example credit unions, community banks, CMBS and other avenues. Our team specializes in finding the best rates, which are often not the local lenders. 

Krishan: When clients come to us looking for financing, we talk to various potential lenders and try to work out the best structure. Ideally, we want to tick off the most boxes for our clients. 

Q: What types of loans are lenders interested in making now? 

Krishan: Florida, Texas, and other southeastern states have attracted lenders’ attention due to their strong economies. In addition, diversification in asset type may also be a key lender strategy in 2023 in order to remain competitive, spread risk and ensure a stable portfolio.

Rick: The truth is that lenders are looking at strong business models and strong borrowers. But that doesn’t mean that there isn’t money for people with a few dings on their credit report or those who have had some ups and down in business in the past. But in general, lenders are a little on the cautious side right now. 

Q: What do borrowers who are interested in SBA loans need to know? 

Rick: I know some borrowers want to avoid the SBA, but they shouldn’t! 

Krishan: Yes, we definitely have clients who found the SBA application process to be too tedious.

Rick: But the truth is that SBA financing may still be the perfect fit for meeting their leverage requirements (equity contribution). We find that our GRP Capital expertise takes the bulk of the burden of the application off the clients, which makes the SBA loan underwriting faster and easier for everybody.  

Krishan: Ultimately, borrowers should not see SBA loans as a burden. Rather it is an opportunity for borrowers to access the financing they need.

Rick: Borrowers should know that 7a loans have historically had variable rates. However, some of our lenders are now providing fixed rate options. We know that interest rates can also come down in the future. So we have to work with our clients to determine the right time to lock in a rate or whether a variable rate is in fact the best product. 

Q: What are the most important reasons to refinance even during these times? 

Rick: Numerous reasons. Moving from 7a loans to a fixed rate option is a great example. 

Krishan: Refinancing with non-predatory lenders or establishing new banking relationships can open up opportunities in the future.

Rick: Refinancing should always make your cash position better or allow for improvements on the property. 

Q: What’s happening with construction loans? 

Rick: It’s complicated!

Krishan: Although construction lending has slowed, lenders are carefully evaluating the ability of general contractors to complete projects in the face of supply chain disruptions, labor shortages, and rising costs due to inflation. 

Rick: If you are considering construction, you need really strong professionals advising you on all aspects of the project. You especially need professionals in budgeting and zoning. Not every lender is interested in construction projects. However we are able to place these loans with good evidence of future profitability.

New Issues and Products

Q: Are there any special programs for any specific loan sectors? 

Krishan: One area we’d especially like to break into is the USDA Food Supply Chain Guarantee. These loan products are newer to GRP but are designed to strengthen America’s food supply chain. They offer many benefits that other businesses sectors can’t capture. The program supports any businesses involved in aggregating, processing, manufacturing, storing, transporting, or distributing food. 

Q: Anything changing in the appraisal process? 

Rick: In the current economic climate, it is likely that appraisers will be more cautious in their underwriting process in order to mitigate risk. They will assume higher supply costs and higher payroll costs, just to name two categories.

Krishan: Appraisers are also considering the possibility of sustained current interest rates. And they are constantly watching the potential for inflation to erode earnings and affect discretionary spending. 

Rick: We try to have these conversations with our clients before and during the appraisal process. Borrowers need to be aware of these potential challenges. They have to clearly understand the value of the property being financed, without emotion or excitement about potential financing. 

As you can see, the current loan climate is changing all of the time. We at GRP Capital are in contact with our large network of lenders to stay on top of all of the ups and downs, new and old ways to structure loans and finding the best matches for our clients.

Pennsylvania farmland

Pennsylvania Hotel Purchased with 504 Loan

Our clients successfully purchased a Pennsylvania hotel loan, using the SBA 504 loan program. They felt that the property had good revenue potential and that they were an ideal set of owner/managers.

Ultimately, GRP Capital matched the clients with a senior lender and a Community Development Corporation. Both of these are needed for a 504 loan. SBA 504 loans are especially attractive right now in the hospitality realm. Conventional lenders can still be hesitant to lend money for hotel businesses, especially outside large metropolitan areas. But the SBA guaranty is enticing to a larger group of lenders. In addition, an SBA 504 loan can be used for slightly more expensive loans

Senior Associate Ryan Dumas really enjoyed working with this partnership group. He stated, “These guys were ideal partners. They are strong, experienced, hands-on operators, who have shown previous success as owner/operators. Most importantly, they were organized, motivated and had a strong business plan. At least one partner knew the area well and was ready to be on-site. This property will benefit from their hands-on, knowledgeable management.”

Advantages of an SBA 504 Loan

  • Lower down payment/equity injection
  • Competitive fixed-rate financing for the life of the loan
  • Long repayment periods (up to 25 years)
  • Affordable payments as a result of the loan repayment periods, which impacts cash flow immediately

Should you consider a 504 loan?

• Are you and all owners of the borrowing entity U.S. Citizens? As of this writing, the SBA regulations require that an applicant for a 504 loan or a 7A loan must consist of 100% citizens. (In the past, a borrowing entity could have a small percentage of permanent residents, that is Green Card holders.)

• Are you current with all previous SBA loans? Each partner of the borrowing entity will have to disclose their current and past SBA loans. Any loans that are not in good standing could delay or prevent the loan from closing. Be particularly mindful of previous EIDL (Economic Injury Disaster Loans). How to find out if you are current with your EIDL loans?

• What’s your timeline? SBA 504 loans can take a little bit longer to close, because two entities are underwriting the loan. If you are considering accessing this type of loan, make sure your Purchase Sale Agreement (PSA) allows enough time to close. Consider engaging an attorney to represent you through this part of the process.

More information about the SBA Debenture Process

Why Choose GRP Capital?

Our GRP Capital team specializes in crafting financing solutions tailored to each client’s unique goals. We even have experience with lender dropouts and critically timed funding needs.

Whether you’re purchasing, refinancing, or building from the ground up, our extensive network of lenders ensures you’ll find funding that aligns with your goals and cash flow needs.

Here’s what sets us apart:

  • We save you time by researching and identifying the best funding options for your project.
  • Our expertise spans various loan products—including non-recourse loans, SBA loans, bridge loans, and conventional financing—so you can navigate even the most complex transactions confidently.
  • Beyond lending, we provide strategic guidance on operational decisions that drive long-term business success.

Blueprint for hotel construction loan

Hotel Construction Loan Closes

Hotel construction loans can be complicated. And our Florida clients’ hotel construction loan had hit some roadblocks.

They were busily building a Fairfield Inn, working closely with their general contractor (GC). They had secured an original construction loan to cover the earliest costs of the project. However, their lender ended up not renewing their loan in the midst of the construction process.

Our clients were in a pickle: they were mid-construction but without secure financing. They come to GRP Capital for our advice and for stable lending. We were very pleased to secure permanent funding and they are on target to welcome guests in the very near future.

Rick Patel, GRP Capital President reflected on the loan closing, stating, “We really wanted to help these clients. They know the hospitality market and were well capitalized for this large construction project. They had just experienced a lender drop-off during a critical time. As a result, this could have been an anxious time. Instead, we all worked steadily as a team through a number of issues. We always had faith in our clients and their vision for this Fairfield construction. And we believe we conveyed that story to the lenders, too. Ultimately, I was proud of the client partners and our GRP Capital team.”

Hotel Construction Loans Basics:

• Do your due diligence on a general contractor There is no more important person during the construction process than your GC. Make sure your GC has done a similar project and that they have gone through a lender approval process. Your GC manages every aspect of construction, from hiring subcontractors and staying on top of permitting. Even more importantly, your GC is in charge of producing and maintaining a budget and a an up-to-date log of all costs incurred.

• Engage a knowledgeable attorney: Construction costs can be high. Nevertheless, don’t try to save money by not engaging a knowledgeable attorney early in the process. Expert legal help from the beginning can save you time and money as you get closer to closing. Your lawyer can help guide you through the regulatory maze and also work to mitigate risks in case of disputes and other issues.

• Keep meticulous records on ongoing expenses: Construction loans are a moving target, especially if money is already being spent. Lenders want to reimburse their clients for genuine expenses, but need the expenses organized in specific ways. Your GC and the lender will be collaborating on this. Again, a GC with good interpersonal skills is an asset in this phase, too.

• Don’t start work until you have permits: Clients often get quite excited with a new construction project and want to break ground as soon as the ink is dry on the land purchase. We cannot emphasize enough the important of first obtaining permits. Your attorney and your GC should know the local landscape, in terms of permitting authorities. Take the time now, so everything is above board or you may have early unnecessary costs that you cannot recoup.

Why Choose GRP Capital?

Our GRP Capital team specializes in crafting financing solutions tailored to each client’s unique goals. We even have experience with lender dropouts and critically timed funding needs.

Whether you’re purchasing, refinancing, or building from the ground up, our extensive network of lenders ensures you’ll find funding that aligns with your goals and cash flow needs.

Here’s what sets us apart:

  • We save you time by researching and identifying the best funding options for your project.
  • Our expertise spans various loan products—including non-recourse loans, SBA loans, bridge loans, and conventional financing—so you can navigate even the most complex transactions confidently.
  • Beyond lending, we provide strategic guidance on operational decisions that drive long-term business success.

East texas yellow rose

New Franchise for East Texas Hotel Loan

Our East Texas clients were ready for a new franchise. After operating a Wyndham Baymont property for several years, they were ready to switch to an IHG Garner flagged hotel. The change would bring down their franchise fees. In addition, the new franchise affiliation would also decrease their third party booking fees. Finally, their new loan refinanced previous debt and also covered a lot of the cost of the reflagging.

GRP Capital worked hard to find a lender willing to make a hospitality loan outside of the largest Texas metropolises. Helping the lender understand the benefits of the new franchise was crucial to the underwriting process.

Krishan Patel, Managing Director of GRP Capital stated, “The hotel owners had demonstrated very strong prior management. Their hotel was already healthy and cash flowing. They had done their due diligence and believed that affiliating with a new franchise would have an immediate impact on both their revenues and their expenses. Ultimately, it was our job to tell their story to lenders and find a good match for them. I was very pleased that this loan closed quickly. Hospitality loans outside the major cities often are harder to place and close, but this project was strong from the beginning.”

In the end, having a large lender network allowed GRP Capital to find an appropriate lender and close the loan as quickly as possible.

Are You Considering a New Franchise Affiliation?

• Compare franchise fees: A basic part of a franchise agreement is the percentage of revenues (franchise fee) that come directly to the franchise. So it’s important to compare these numbers. However, be aware that there is variety in the industry. Franchise fees differ not only by flag, but also by type of property (economy, mid-scale, luxury).

• Determine how your franchise affiliation benefits you: Different franchises and different brands within the franchise offer various benefits. Does your franchise have a popular loyalty program? That can really improve your market penetration. Does your brand have general strong marketing and advertising that benefits the franchisees?

• Calculate the costs for reflagging: What will your immediate costs be? You will have to engage in a PIP (Property Improvement Plan). The PIP typically includes refreshing and renovations from the parking lot to the lobby to the guest rooms. And sometimes these are quite extensive. Calculate these costs from furniture to labor, to a big new outdoor sign.

• Consider hiring an attorney to negotiate with the franchise: Your franchise agreement is a long, complex document, that obligates you for many years. An attorney with experience in dealing with franchises can negotiate fees as well as the PIP components to your advantage. This can save time and also position you best in your marketplace.

• Choose the best timing for a transition. A new franchise requires multiple steps. Consider your labor pool and your high season. How can you fit in a transition that is the least disruptive and costly to your business? Do you need to build in some interest only time in your loan if your revenues will be sharply curtailed?

• Learn about all types of loans: There are many types of hospitality loans, including conventional loans, SBA loans, bridge loans and non-recourse loans. Small Business Administration (SBA) loans are often the best matches for hospitality loans. Crucially, the SBA is willing to guarantee a larger variety of hospitality loans, including economy and mid-scale properties.

Why Choose GRP Capital?

Our GRP Capital team specializes in crafting financing solutions tailored to each client’s unique goals.

Whether you’re purchasing, refinancing, or building from the ground up, our extensive network of lenders ensures you’ll find funding that aligns with your goals and cash flow needs.

Here’s what sets us apart:

  • We save you time by researching and identifying the best funding options for your project.
  • Our expertise spans various loan products—including non-recourse loans, SBA loans, bridge loans, and conventional financing—so you can navigate even the most complex transactions confidently.
  • Beyond lending, we provide strategic guidance on operational decisions that drive long-term business success.

Refinance for Carolina Maturing Note

Mortgages are not forever and a maturing note means it is time to take action right away.

Our North Carolina client owned a franchised hotel. His mortgage was maturing and had a balloon payment at the end. Previously, he had renewed his mortgage with his existing lender. However, his lender’s appetite for hospitality lending had changed. The bank leadership had already filled their quota of hospitality loans. They no longer wanted to refinance or renew his maturing note.

We have seen multiple cases of lenders not refinancing or renewing a maturing note. This can be due to the leadership directives of the financial institution, their internal industry quotas or internal risk assessment.

Ultimately, our client turned to GRP Capital to find a suitable lender, one who had room in their portfolio for a hospitality loan.

Krishan Patel, Managing Director of GRP Capital stated, “Our client was hopeful that their current lender would renew their mortgage and was distressed when that was not the case. Throughout the process of finding him a new loan, I personally kept in regular contact with the current lender. We had a good working relationship, even after the date of the note maturation passed. I regularly reassured the lender that we were in the process of securing financing. Fostering a relationship with both his current lender and the new one was critical, as it turned out that our client had a family emergency. This emergency caused a delay in closing, but one which was communicated to all stakeholders.”

Having a large lender network allowed GRP Capital to find an appropriate lender and close the loan as quickly as possible.

Planning for Your Maturing Note:

• Explore your current lender’s options: Well before your note matures, contact your current lender. Inquire if it is possible to renew or refinance and what the details of the new loan would be in terms of monthly costs and ultimate maturity details.

• Determine what is most important to you: Are you concerned about government guarantees? Are you rate-sensitive? Does your loan need to have a certain length? Each borrower has definite priorities. Decide what are your 1-3 most important components of a loan.

• Don’t delay in dealing with a maturing note: Whatever you do, start working on financing at least six months prior to maturation.

• Preserve Your Relationship with Your Current Lender: Pay your mortgage on time. If additional documents are requested like financial statements or an updated appraisal, be compliant and responsive. Ask your lender to prepare a loan history and eventually a payoff statement.

• Get your documents ready. If you are considering a refinance, gather your materials about your business operations (financial statements, business bank statements, budgets and projections). And also assemble the personal documents of any guarantors including three years of tax returns, personal financial statements and information about any other businesses of which you own 20% or more.

• Why should I consider an SBA loan?:  Small Business Administration (SBA) loans are often the best matches. For instance, the SBA is willing to guarantee a larger variety of hospitality loans, including economy and mid-scale properties.

Why Choose GRP Capital?

Our GRP Capital team specializes in crafting financing solutions tailored to each client’s unique goals.

Whether you’re purchasing, refinancing, or building from the ground up, our extensive network of lenders ensures you’ll find funding that aligns with your goals and cash flow needs.

Here’s what sets us apart:

  • We save you time by researching and identifying the best funding options for your project.
  • Our expertise spans various loan products—including non-recourse loans, SBA loans, bridge loans, and conventional financing—so you can navigate even the most complex transactions confidently.
  • Beyond lending, we provide strategic guidance on operational decisions that drive long-term business success.

Gulf Coast Hotel Loan Nets Huge Savings

Timing a refinance can be critical.

Our Florida clients had a somewhat expensive loan and wanted to refinance into a more affordable loan.

Not every loan is perfect and the borrowing partners had some bumps in the road. First of all, they wanted to change ownership of the loan. And more significantly, the hotel’s revenues were a little soft, reflecting what is happening right now in certain (but not all) Florida markets.

Changing the partnership required reviewing the operating agreements with our team and legal counsel. It’s very important that operating agreements match up with filed K1’s.

The revenue issue was a little worrisome. However, the lender was aware that a more affordable loan would free up expenses and increase profitability right away. In addition, the owners had sensible plans for operating through continued lower occupancy. Dynamic pricing and hands-on management would definitely be crucial.

Ultimately, the loan closed. Our clients had to bring some money to the table, which is not always the case in refinances. But within six months of closing, they will be still be in Florida high season. More importantly, all of their closing costs will have paid for themselves, with the decreased loan costs.

Krishan Patel, Managing Director of GRP Capital stated, “We really wanted to help these borrowers. They are repeat clients of ours. We knew that the most important aspect of their refinance was its affordability, and we focused all of our energy on getting the most competitive rates within the tight hospitality lending market.

As a Florida-based company, we also have a reputation for understanding the various marketplaces within this complex state. Lenders look to us for our knowledge and our projections regarding future business profitability. “

Timing Your Refinance:

• Interest Rates: Know what the ranges of interest rates are out there for your type of business. Rates will vary between conventional, SBA, non-recourse and bridge financing. And interest rates can vary by business project. GRP Capital can obtain a variety of term sheets for you after you determine what the most important aspects of a loan are.

• Determine what is most important to you: Are you concerned about government guarantees? Are you rate-sensitive? Does your loan need to have a certain length? Each borrower has definite priorities. Decide what are your 1-3 most important components of a loan.

• Don’t delay in dealing with a maturing note: If you have a note that is maturing, check with your current lender to see if they are interested in extending or refinancing first, particularly if you have a good working relationship with them. There are expenses when you change lenders and you have to determine if that is in your best interest. Whatever you do, start working on this at least six months prior to maturation so you aren’t stuck without financing.

• Be prepared for pre-pay penalties: Do your homework on your current loan. Be sure that you don’t have pre-pay penalties. These are additional costs that the lender tacks on if you wish to pay off a loan early. Many loans have a decreasing pre-pay structure so that there is a larger penalty at the beginning of a loan and this amount decreases and then disappears. Sometimes it is advisable to refinance, even if there is a prepay. This is especially true if the new loan’s savings outweigh the prepay penalties within a fairly short period.

• Why should I consider an SBA loan?:  Small Business Administration (SBA) loans are often the best matches. For instance, the SBA is willing to guarantee a larger variety of hospitality loans, including economy and mid-scale properties.

• Get your documents ready. If you are considering a refinance, gather your materials about your business operations (financial statements, business bank statements, budgets and projections). And also assemble the personal documents of any guarantors including three years of tax returns, personal financial statements and information about any other businesses of which you own 20% or more.

Why Choose GRP Capital?

Our GRP Capital team specializes in crafting financing solutions tailored to each client’s unique goals.

Whether you’re purchasing, refinancing, or building from the ground up, our extensive network of lenders ensures you’ll find funding that aligns with your goals and cash flow needs.

Here’s what sets us apart:

  • We save you time by researching and identifying the best funding options for your project.
  • Our expertise spans various loan products—including non-recourse loans, SBA loans, bridge loans, and conventional financing—so you can navigate even the most complex transactions confidently.
  • Beyond lending, we provide strategic guidance on operational decisions that drive long-term business success.