About a year prior these past clients came to us wanting to purchase this Ramada Inn, but at that time the property was not stabilized due to the previous owner’s poor management and our borrowers did not have any previous experience in hospitality. They had been exchanging out of multifamily and into Hospitality. As a result they had to take hard money loan with a 12 month term. But now less than 1 year later they returned to us wanting to see what we can do to get them into a better loan program, and also they were hoping for additional loan dollars to be used towards necessary improvements.
The biggest challenge was the lack of seasoning, no filed returns for historicals, the need for additional loan dollars for capital improvements, and the need for high leverage.
We structured for the client a SBA 504 loan that also allowed for funds to go towards the improvements, basically ended up at 79% LTC. They received terrific rate and terms. It was a complicated deal but we got it done.