Category Archives: Small Business

Partner Group Buys New York Hotel

The New York hotel marketplace can be complex. Real estate taxes and procedures can be complicated with commercial real estate deals. But our clients were ready to purchase a New York hotel. They perceived that the state has largely bounced back from COVID, especially upstate.

Working closely with our entire team, they purchased the hotel and are ready to take advantage of summer high season. Our clients selected SBA financing for their loan. As a result, our team needed to be nimble, especially with changes in the SBA administration. Everybody was particularly mindful of the rules for SBA eligibility.

Senior Associate Ryan Dumas was excited to close this loan. He remarked:

My clients were ready to purchase this upstate New York hotel and have a good handle on this specific market. An SBA loan was the best loan vehicle for them. However, we were all aware of changes in the SBA. We had to make changes to the loan details a couple of times, but I was thrilled to get this across the finish line. I know my clients will own and manage this property in ways that maximize revenue, while keeping an eye on expenses.

Is an SBA Loan in Your Future?

  • The Small Business Association (SBA) has multiple loan programs and guarantees. They each have their own eligibility standards.
  • SBA loans may be the best choice for certain markets and for certain types of hospitality properties, especially hotels with external corridors.
  • Because of changes to SBA staffing and increased scrutiny of non citizen partners, borrowers should be aware that the SBA approval can take three to four weeks, in addition to lender underwriting and approval. (These can happen simultaneously.)
  • SBA also limits the amount of SBA debt each guarantor can have. This debt load does not include prior EIDL’s (Economic Injury Disaster Loans).

Contact our team if you are considering SBA funding or any other loan products. We can help you determine 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.

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.

Meeting from above

SBA Launches Working Capital Loan

The Small Business Administration has just announced a brand new working capital loan program. This program will be administered as a 7a loan. Although the SBA has not announced a start date, the official launch of the loan could occur as early as third quarter 2024.

The name of the pilot program is the Working Capital Pilot Program (WCP). The goal is to provide lines of credit to small business owners. The SBA particularly wanted to create this financing option during the current extended high rate environment.

According to the SBA’s press release, “This pilot program represents a significant expansion of the SBA’s loan programs by adding a line of credit product with an innovative fee structure engineered to increase flexibility for small businesses and lenders, providing more options when structuring a line of credit to meet businesses’ specific needs.”

What we Know about the Working Capital Loan Program:

• Competitive Rates for a Line of Credit: This loan can be utilized for short-term capital injections. As a result, the loan should help increase profitability or jump start a new aspect of a business. The shorter team loans and flexible designs should be enticing to many entrepreneurs.

• Flexibility: The WCP offers greater flexibility than other SBA 7a offerings in terms of maturity date and loan terms.

• Asset Based Financing : The WCP will offer a line of credit, based upon the assets of the small business. This should enable business owners to manage cash flow and to also deal with any snags in supply chains.

• More guidelines are forthcoming: The SBA is offering one-on-one consulting to lenders to help educate their personnel first about the advantages and details of the WCP. GRP Capital expects to be able to recommend these loans after a short study period with our lending partners.

• Using Valued Lender Partners: In order to access this working capital loan, we will need to engage with experienced lenders in the SBA marketplace. These lenders are already in contact with our GRP Capital team. Together we are determining the best usage of this new financing option.

• Annual Guaranty The loan will include an upfront SBA guaranty. Borrowers can pay this guaranty annually.

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.

Interest rate

Interest Rates and Your Loans and Investments

Interest rates are a hot topic right now. But how do they impact your current and future loans? Whether you’re a seasoned investor or business owner, understanding the mechanics of interest rates is critical. Only then can you make informed decisions.

Let’s break it down.

Cost to borrow money:

  • A loan’s interest rate determines how much it costs to borrow money. The interest rate determines the additional amount you pay on top of the principal.
  • Lower rates reduce your borrowing costs. As a result, your cash flow and profitability improve.

Value and growth of investments:

  • On the flip side, interest rates dictate the returns on investments. These include bonds, treasury bills, savings accounts and certificates of deposit (CD’s). Higher interest rates can mean better yields for investors.
  • Compounded interest rates accelerate the growth of these investments over time.
  • It is critical to compare returns against inflation. If inflation outpaces interest rates, your purchasing power diminishes.

Key Factors to Know about Interest Rates:

•Not every loan is dependent on the Fed rate or the prime rate. While many loans are influenced by Federal Reserve policies, others are pegged to different benchmarks. These include the SOFR (Secured Overnight Financing Right), swap rates or even lender-specific indices.

The prime rate is often used as a baseline for commercial lines, with an additional margin based on borrower risk. (Prime +1.5 for example).

• Fixed vs. Variable Rates

  • Fixed rate loans lock in your interest rate for a part of the life of the loan. This provides stability, but can be less advantageous if market rates drop significantly.
  • Variable rates fluctuate with market conditions and are often readjusted quarterly. While they offer savings during low-rate environments, they can become costly when rates rise.

FAQS about Interest Rates:

Q: I have a fixed rate mortgage or business loan. Should I be concerned about interest rates?

A: Not necessarily. Fixed rate loans shield you from market volatility; your payments remain constant. However, if the rates drop significantly lower than your fixed rate, it might be a good idea to explore refinancing. At GRP Capital, we can help you assess whether refinancing aligns with your long-term goals and global cash flow.

Q: Are variable rate loans risky?

A: Variable rate loans can be advantageous when interest rates are low but require careful planning for potential increases in payments during high-rate periods.

  • A $1 million loan at 4% variable interest would cost $40,000 annually in interest payments. If the rate increases to 6%, that jumps to $60,000, a significant cash flow consideration.
  • Business owners who prefer predictable expenses often opt for fixed rate loans despite potentially higher costs during lower rate climates.

Q: How do higher interest rates affect my ability to secure financing?

A Higher interest rates increase borrowing costs. They may also tighten lending criteria, as lenders assess higher risks. This makes it even more important to work with experienced professionals who can identity competitive financing options tailed to your needs.

Navigating the complexities of financing in today’s fluctuating rate environment can be challenging. But that’s where we come in.

At GRP Capital:

  • We specialize in matching client with lenders who understand their unique projects.
  • Our expertise spans acquisitions, refinancing and construction financing across various industries.
  • We prioritize solutions that balance competitive terms with sufficient cash flow for long-term success.

Whether you are looking to refinance existing debt or secure funding for growth opportunities, our GRP Capital team is here to guide you every step of the way. Let’s discuss how we can help you achieve your business goals.