Sba 7a Loans and Hotels
Found a hotel that you plan on purchasing and are now examining options for your hotel loan? You will quickly discover that unless you’re planning on putting 35% down or more (and in the form of cash, not equity from your house for example), that the hotel has a strong flag and great historical financials your only option will be either the SBA 504 or the SBA 7a loan.
As an example on how conservative things are getting, we are currently working with a borrower that is intending to purchase a Comfort Suite. This individual has a net worth over $15,000,000 with $2 million in cash (in his saving account), 20 year experience and owns 6 other hotels, all of the same size and similar flags and was told by his primary bank that he would have to go the 504 route and still put 35% down.
This leads into a bigger point. Not all SBA lenders are the same. Not all SBA lenders structure loans in the same way. It pays to be informed and to deal with knowledgeable professionals. Also the process of an SBA loan is really not that more cumbersome than any other commercial mortgage especially when you work with the right institutions that know the process inside and out. It is very possible to close an SBA loan in 45 days. Much of the issues that caused the bad press that the SBA received (and a lot of it deserved) has been resolved. And most importantly they unlike so many other banks and lenders are still funding deals.
Generally speaking the SBA 7a is reserved for loan under $2,000,000, while the 504 can go up to $7,000,000. The SBA is a Prime plus rate which MOST of the time floats (we work with 2 banks that offer this as a 5 year fixed 25 year amortization loan). The 504 program boast long term fixed rate financing, like 5 or 10 years. However most importantly, both options provide 85% loan to cost and or loan to value financing which is becoming very rare in this market.
(ArticlesBase SC #405222)
Small Business Advice - SBA 504 Loan Program
The SBA 504 loan program suffers from an identity crisis and misconceptions. SBTV.com's Advisor Chris Hurn, explains how to put it to work for your business. (07:25)
How to Obtain a SBA Loan
http://www.frugalbrothers.com I have received many requests to talk about getting the funds to start or expand a small business. Here is some info on how the SBA works. Distributed by Tubemogul. (08:47)
Which Loan is Right for Your Business
Small Business Loan Options and Tips. Finding the right loan for your small business can be hard work. Christopher Hurn, an expert in commercial capital gives some helpful tips on how you can get the best loan for your business. (05:29)
How to Repay Student Loans - Part 21
How to reduce student loans quickly - Can student loans be dismissed through bankruptcy? (01:00)
How to Repay Student Loans - Part 19
How to reduce student loans quickly - How do I go about consolidating my student loan? (01:27)
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Below is some real world advice on SBA business financing in this market. Specifically, advice on getting your loan closed.
For small business owners that are interested in purchasing a new property or are attempting to refinance their existing mortgage with an SBA loan, there are a few things you should consider to help expedite the process.
Perhaps you’re facing a ballooning loan, found an excellent property to purchase, or need refinance your existing loan in hopes of reducing your payment. Whatever your goals are, most people at the beginning of the loan process want to know “is this really going to get done? Am I wasting my time even contemplating this?”
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How does SBA financing work? First of all, it is very similar to regular commercial bank financing. In fact, one of the biggest misperceptions out there is that the SBA finances transactions themselves. This is not the case. Loans are financed by banks and the SBA guarantees the bank in case the borrower defaults.
How do you apply for an SBA loan? It’s recommended that you do a phone interview first, than assuming you think there is a fit, provide the required information to the SBA bank or lender.
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