Florida Hotel Closes with SBA 504

October 5, 2023

Our Florida client was able to purchase a new Gulf Coast hotel, taking advantage of an SBA 504 loan.

As experienced multi-family owners, our clients had their eyes on a South Florida property.

However, the lending space has changed recently for hospitality loans. Consequently, lenders and borrowers are interested in the guaranty that the SBA loans provide. The benefit of an SBA 504 loan is that it is fixed interest and competitively priced.

GRP Capital President Rick Patel and the whole team worked closely on this loan. He noted, “The SBA 504 loan process is a little more rigorous. Sometimes this can scare clients. But our team worked closely with all of the various personnel to get this loan closed. I want everybody to consider SBA financing when it is appropriate. We know we have the systems in place to make the detailed underwriting much easier for our clients so they can take advantage of the SBA products.”

Fast FAQ’s on SBA 504 loans:

• What’s a CDC? A CDC is a Certified Development Company. These are community-based partners who underwrite the loan and create the package. They are the first step in getting a loan closed. Most importantly, they know their way around the SBA and the best paths to secure SBA approval.

Tell me the difference between the SBA 504 and the SBA 7a: The 7a loan is typically (although not always) for smaller loans and for businesses that might have more trouble obtaining conventional financing. Currently SBA 504 loans hold fixed rate loan structures, while many SBA 7a loans are structured with a variable rate. Both loan products can be used for purchases and construction, while 504 loans may have restrictions regarding refinanced debt.

• Is the equity requirement affordable in an SBA 504 loan? Typically, yes, but every project is different. In the case of this closing, the equity contribution met the budgetary needs of the borrowers.

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.

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