Category Archives: Hospitality

Strong Management Results in New Refinance

GRP Capital is pleased to close another hotel refinance loan.

Our Southern California clients faced serious challenges during the beginning of the COVID-19 pandemic. Their hotel is located very close to Coachella. As a result, the cancellation of the famous festival in the early days of the pandemic could have been devastating. But our clients worked hard and kept their operating costs down. They continued to market their hotel carefully and when travel restrictions eased, were back in business.

Smart management eventually paid off. They also took advantage of the Small Business Administration stimulus package. Specifically, they obtained a modest EIDL (Economic Injury Disaster Loan) and two small rounds of Paycheck Protection Program loans. They used the proceeds from the loans appropriately, keeping their debt manageable. Their sound practices demonstrated that they were appropriate for a new refinance.

New refinance requirements when you have SBA COVID-19 loans:

• Subordinate the EIDL: At times, a lender will request a subordination. This means that the client gives permission to pay their new loan first and the EIDL  loan moves into second position. GRP Capital works with lenders who understand how to subordinate the loans, making the process seamless for our clients.

•  Apply for forgiveness of PPP loans: If PPP loans have been used appropriately (for payroll, mortgage and other pre-approved costs), borrowers can have the loan amounts forgiven. This process originates with the lender.

After working together as a team with Business Associate Vijal Suthar,  our clients now have a reasonable mortgage payment that makes their cash flow even stronger. They are renting rooms and eagerly awaiting the return of Coachella. Vijal Suthar said that “closing this refinance was a signal that lenders want to loan money. In particular, lenders prefer strong borrowers who show savvy business sense and strong management skills. These clients did the right things to keep their hotel afloat. I was very pleased that their reward was a very competitive and affordable loan.”

Are You Ready for a New Purchase or Refinance Loan?

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.

Want to know more about other business opportunities? 

GRP Client Closes on Florida Comfort Suites

Comfort Suites, an upper midscale chain, offer opportunities and challenges for potential buyers. Lenders can be cautious with all hospitality loans; upper midscale chains require particularly careful underwriting. Our network of lenders wants to ensure that the properties have made it through the toughest parts of the pandemic. In addition, new businesses should have a positive cash flow and potential for steady or even increased revenue.

The entire GRP Capital team worked together to close this Florida Comfort Suites. Our clients were ready to take on this upper midscale chain. So we worked with the clients to prove that this property was worth the asking price, as well as shoring up the appraised value. As a result, the lenders approved the loan. GRP Capital President Rick Patel stated, “This loan was complex and required a lot of attention and focus on the part of our clients and our team. I was very pleased that the loan closed in time for our clients to take advantage of the latest stimulus package.  I feel confident that the new owners will be able to activate their management plans in order to make their new property profitable with strong cash flow.”

Purchasing A Comfort Suites or Other Upper Midscale Properties: 

• Consider Carefully How Much to Offer:  Buyers need to be able to prove that the property is priced right. We encourage our clients to talk with us prior to making an offer. In this way, we can offer guidance and be sure that the offer is fair for everybody

• Shore Up the Appraised Value: Many times, buyers are interested in purchasing properties that are performing below the market, as these are often priced more affordably. However, lenders require assurance that properties will be profitable. Prepared clients should create strong business plans, including pro formas which address why the property isn’t reaching its profit potential.

•  Demonstrate Your Borrowing Strength: Potential borrowers should have three months of funds for equity injection. These monies should be from accounts that are easy to trace, without large movements of money moving into them and free of borrowed funds and large gifts.

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.

First Time Buyer Purchases Hotel

GRP Capital is pleased to announce the loan closing for our client, a first time buyer.  GRP Capital Managing Director Krishan Patel as well as GRP Capital President Rick Patel worked closely with our client and our lender to help everybody through this new terrain.  

Challenges for a First Time Buyer: 

• Finding the right property to purchase: First time buyers need to be picky. They should choose a property with profit potential. Even more importantly, a first time buyer needs to select a property that they can manage. Being too ambitious in terms of size of property, any issues facing the business or even complexity of management are not “perfect first time properties”.

•  Proving themselves to the lender:  Lenders want first-time buyers tho prove two things: financial stability and management experience. We worked in tandem with our lender and our clients, so that our clients could demonstrate their solid business plans. Our clients had experience but not decades of it. Our lender needed encouragement. Therefore, our relationship with the lender allowed them to trust us and our evaluation of the client’s skill set.

•  Solid Management Practices:  Lenders regularly request a management resume from potential borrowers. They are looking for years of experience and what type of businesses our clients have managed. We help our clients craft these resumes, so they can highlight their strengths during the underwriting process.

Rick Patel upon closing this loan stated, “We really wanted to help our client pursue their ownership dreams. They have good, strong management experience and will be able to improve the profit margins of this hotel. They are already executing their management plans as we approach the Florida high season.” 

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.

Independent Hotel Refinance

Our clients, owners of an independent hotel in western Florida, closed their loan. They previously had a private loan, and were looking for more traditional financing.  GRP Capital President Rick Patel worked closely with our clients, who are very organized, hands-on small business owners. 

Independent Hotel Ownership: 

• Proving revenue and expenses: Independent hotel owners typically do not participate in the Smith Travel Research (STR) reporting. As a result, this third party report is not available to lenders and underwriters. Instead, we at GRP Capital provided other documents that demonstrate the health of the business. These can include financials (which can even be certified if necessary) as well as sales tax reports and business bank statements.

•  Strong Management Skills:  Our clients are very hands-on. They know their budget and their expenses and can rattle off figures without even going back to the books. That is invaluable during the appraisal and underwriting process, when we are painting a picture of how the hotel functions.

•  Solid Marketing Plans:  Independent hotel owners have the benefits of being their own bosses without the parameters that franchises set. However, they also do not have the marketing budget that franchises have. It’s important to demonstrate how independent hoteliers are retaining and improving market share. Solid marketing plans are written out, with goals and timelines.

Rick Patel upon closing this loan stated, “I really enjoyed working with these clients. I love seeing a hard-working couple who are really just in need of a little help to kick-start their business to the next level. They benefited from our connections with our lender network and were able to transition to permanent  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. If you are considering becoming a first-time (or second or third time!) buyer, we can assist you.

Texas hotel loan closes

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.

Transitioning from Owner Financing to Traditional Financing

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.

Quick Closing Was Key for Central Florida Hotel

A quick closing was crucial to our clients. They had negotiated a purchase sale agreement (PSA) with the seller. This PSA stipulated a set time for closing. Any delays would require an additional fee to be paid to the seller. As a result, GRP Capital turned to our trusted lenders’ network. In our search, we emphasized the need for a quick closing. We already knew our clients well, as they were repeat customers. But the loan was still complicated with multiple partners, each with large business portfolios. It took a full court press from all of our GRP Capital team to achieve this fast closing.

GRP Capital President Rick Patel worked closely with the multiple partners and the lender to secure this complex, high value loan for our clients. Our clients now have a conventional loan with competitive rates. 

Keys to a Fast Closing: 

• Organized finances:  We had worked with the clients’ certified public accountant (CPA) before. As a result, we knew that he could obtain documents quickly. These included up-to-date financials for the borrowing entity and all of the partners’ affiliate businesses (if they owned 20% or more of them). We could not have achieved a quick closing without our partnership with the clients’ CPA. Disorganization can delay closings.

•  Motivated sellers: Some clients think that it is only the buyers that have to provide documents. That is not the case. Sellers also have to provide financials, including up to date business statistics. In addition, the underwriter requires independent confirmation of these documents, sometimes through sales tax receipts. If a business has a Small Business Administration Economic Injury Disaster Loan, the lender requires even more documents. Lenders typically request promissory notes and will require that EIDL’s be paid off at or before closing.

•  Organized Equity Injection:  GRP Capital worked with the partners to identify the best bank accounts to use for the equity injection. These accounts were “clean”, which means without large deposits from outside sources. Submitting equity information early in the underwriting process prevents delays.

Rick Patel remarked, “To be honest, this loan was a challenge. The clients had an abbreviated timeframe. But the combination of our long-term relationship with the clients and their professionals (lawyers and accountants) helped us achieve a quick close. Lots of communication and dedication to serving our clients were critical.”  

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.

New Owner Buys South Carolina Hotel

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.