Tag Archives: Florida hospitality

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.

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.

Beach seen through a drop of water

Complex South Florida Hotel Loan Closed

Our client partnership group needed a Florida hotel loan. They were ready to purchase an underperforming hotel in South Florida. The hotel showed potential for growth, particularly with our partners’ plans to be hands-on right away. Currently, the hotel was owned by remote partners.

Krishan Patel, Managing Director of GRP Capital stated, “This partnership group consisted of a management team who were ready to enter the Florida market for the first time. The Florida hotel loan marketplace is complex and the lender pool has narrowed. We were able to secure competitive financing, requiring strategic structuring of the partnership. Our guidance was key to ensuring there was SBA eligibility, which is often critical in Florida hotel loans, especially in the mid-scale and economy sectors.”

The entire GRP Capital team worked together on all of the components of this loan. We even made sure one of the partners was able to sign his documents, while traveling on a ship!

Florida Hotel Loan FAQ’s:

• What should I do about insurance while I’m looking for financing? If you’re refinancing, just inform your agent that you’ll need updated insurance certificates. If you are purchasing a new property, start getting insurance quotes ASAP, especially if a lender is requiring flood and/or wind coverage. These extra coverages can take more time to procure. If you don’t have an agent, you can ask the seller if they are satisfied with their insurance agent. That person knows the property already. We also keep an updated list of trusted agents in our database.

• How come my own local bank won’t just loan me the money? This happens a lot! Different lenders have different interests for a variety of loans! We know our lender network well. That means we know who is interested in hospitality loans and who is not. That saves you time and money.

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

• What about Hotel Statistics? The Florida marketplace is diverse with certain areas performing better than others. Accurate hotel statistics, through STR reports, financials and occupancy tax records are critical. These documents provide the fullest picture of the hotel’s revenue. As a result, the lender can feel more comfortable in underwriting and approving the loan.

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.

college football stadium

Fast Closing for North Florida Hotel

Our clients wanted to purchase a Florida hotel, but only with a fast closing. The hotel was in a college town and they wanted to capitalize on as much of the football season as they could. Adding to the challenge was a looming government shutdown, which would affect the approval of any government-guaranteed loans.

Krishan Patel, GRP Capital Managing Director, worked closely with the clients and the GRP Capital team to find an appropriate lender and loan product. Krishan noted that “Like many of our clients, this group of partners wanted a fast closing. However, what really helped was the preparedness of the clients and the hard work of our GRP Capital staff. In addition, the borrowers had engaged a strong team of professionals to help with legal work, including negotiations with franchise. All of these elements were critical to actually achieving a fast closing.”

Must Haves for a Fast Closing:

  • The right type of project. Construction loans can take longer to underwrite, as can complicated businesses. This loan was for the purchase of an existing hotel with clear, reliable statistics about previous performance. Thus, a fast closing was a doable proposition.
  • Type of loan matters, too. A fast closing can be possible for a bridge loan. However, SBA loans can sometimes take longer to underwrite. Understand that lenders and agencies’ timelines may lead the process.
  • Responsiveness to lender’s requests. Lenders typically ask for personal financial statements and often proof of global cash flow for guarantors. Be prepared to provide those documents. It is also reasonable for lenders to request tax transcripts, which confirm the accuracy of submitted tax returns. Submitting these documents quickly and cheerfully is the best way to demonstrate good will and trustworthiness.
  • Financials and other documents to show previous income and expenses. These can include detailed financial statements (Profit & Loss statements as well as balance sheets), sales tax bills, STR reports (for hotels), as well as any in-house statistics. If you are refinancing a loan, then you should accumulate these documents, with the help of a trusted accountant, if necessary. If you are purchasing a business, the seller or the broker should be able to provide these documents.
  • Accurate and thoughtful business plans and projections. Spend some time at the beginning of the loan process creating a strong business plan. This should include not only your projections for future income and expenses. It should also include your ideas for operating and managing the business, including marketing, personnel, financial management and maintenance.
  • Engage competent professionals right away. Engage an attorney, even before signing a purchase-sale agreement. Tell your accountant of your loan process, and that you may need more recent financials. If you have had a good experience with a title company in the past, make plans to use them again. If you need a survey, get right on that, as these can take some time.

Need more information on creating a strong business plan?

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, renovating 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.

Orlando skyline

Bridge Financing for Orlando Hotel

An Orlando client faced a serious loan concern and needed immediate bridge financing. His loan was facing a maturity and the current lender was not interested in refinancing.

Rick Patel, GRP Capital President noted, “Several of our recent hospitality clients are experiencing similar circumstances. The hospitality lending scene is changing and constricting actually. Lenders’ appetite for hospitality is shifting. Certain lenders’ “hospitality buckets” are filling quickly while other lenders are showing greater interest in hospitality. What we provide for our clients, including this one, is industry knowledge. That means we know which lenders to turn to for financing, including bridge financing.”

The bridge financing paid off the previous loan and also provided some needed working capital.

Bridge Financing Basics

  • A bridge loan creates a bridge between a project that requires funds and the necessary financing.
  • Bridge financing is temporary.
  • Obtaining a bridge loan allows the loan to close quickly; therefore you can create the time you need to secure permanent financing solutions.
  • These interim loans often have short term higher interest rates. The borrower understands this is the cost of interim funding.

Reasons for Bridge Financing:

  • Need for immediate closing due to seller demands.
  • Lender Dropout! The lender stops the process during underwriting, putting the entire loan in jeopardy.
  • Quick closing requirements, as buyer wants to use 1031 funds.
  • Buyer demand: The buyer has to have this property and it has to close now! Sometimes our clients will see an underperforming property that has just come on the market. Or they have had their eye on a competing business and knew they wanted to purchase it if it were for sale. These buyers are seriously motivated!
  • Competitive bidding: sellers will often entertain multiple bids from multiple buyers. Being able to close quickly may seal the deal.
  • Our clients may want to use SBA (Small Business Association) guaranteed loans or HUD (Housing and Urban Development) loans or Department of Agriculture loans (for rural properties). These government backed loans take a little longer to close. Clients who use bridge lending can close quickly and then refinance the loan through these agencies.
  • Businesses that need to stabilize. We have many clients who are very talented owners and managers. But new businesses can be risky and lenders can be risk-averse. If borrowers take possession of a business, turn it around and stabilize it, their business can be more attractive to lenders in the near future.

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, renovating 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.

Bridge Financing for Large Hospitality Loan

Our long-time clients had a vision for a Gulf Coast hotel. They knew that they would require a large hospitality loan. Securing financing in the hospitality industry has become a little more difficult. As a result, they depended on GRP Capital to do the research to find an appropriate lending partner.

This hotel property shows great promise as it is situated near a brand new planned exit ramp. In addition, the borrowers had detailed plans to create a dual brand flagged hotel. After renovations, floors would alternate between traditional guest rooms and suites. This will provide two price points and two unique choices for travelers and guests. At the same time, the hotel would be utilizing the same staff and management company.

The bridge financing will provide resources for the full renovation and allow time for the borrowers to execute on their business plan. In addition, this will give the partners time to stabilize the asset and secure permanent financing.

Rick Patel, GRP Capital President, commented, “This $12.5 million loan showcased our GRP Capital teams’s ability to handle and close a large hospitality loan. We found a new to us lender in our network. This lender had the appetite for a large hospitality loan. They worked closely with our team and the borrowers to understand their vision and fund it.”

Bridge loans, including large loans such as this, are great options for financing, especially during the current government shutdown. Diversifying your portfolio from smaller SBA-guaranteed loans to a larger hotel or a more premium class one can be a very positive business decision for savvy entrepreneurs. 

If you are interested in non-SBA loans, particularly bridge loans, reach out to our team right away. 

Renovation Funding Basics:

• Secure a general contractor if one will be needed. Many lenders require general contractors for large renovations, particularly if there will be architectural changes. Even if you have reliable maintenance staff who can handle large jobs, you may still need to bring in a GC.

• Stay on top of budgeting. If your loan will include renovations, the lender needs many details. Most importantly, they need the components of the renovation broken down by line item, materials and labor. And if this changes through the underwriting process, the budget has to be revised.

• Determine down time:  Will renovations affect your business? Will you be able to have customers or will you be partially open for business? Be sure that your financial projections and your timeline are clear, so the lenders can build in interest free periods while you are not taking in revenue.

More information on Bridge Financing

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, renovating 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.