Could Refinancing with an SBA Loan Be the Right Fit for Your Hotel’s Future?

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As a hotel executive, your day is full of small decisions. You may even be juggling several jobs — from HR to chief contractor — as you work to make your business as successful as possible.

At the end of the day, refinancing is yet another item on the all-too-long hotel executive’s to-do list, but unfortunately, it’s a decision that could heavily impact your ability to keep occupancy up and positive reviews rolling in.

If you’re planning to expand or improve your hotel, or perhaps are facing yet another refinance after three or five years with a conventional loan, financing through a U.S. Small Business Administration­–approved lender might be the right match for you.

 

The U.S. Small Business Administration, or SBA, exists specifically to understand the small business climate throughout the country, and to ensure that small businesses receive the financing they need to continue to grow. These loans are ideal for business owners who cannot secure conventional financing — so if you have less-than-ideal credit, or if you still have a young business, you should check out SBA loans. If you have good credit but are still having a hard time securing a conventional loan, look into the ways that an SBA loan could help with debt consolidation and liquidity preservation.

In fact, SBA-guaranteed loans have many benefits that can help hotel owners find some simplicity and stability for their businesses. Here are a few other characteristics of SBA loans to consider as you make this choice:

  • SBA real estate loans carry loan terms of 20–25 years, which is significantly longer than most real estate loans offered in the market
  • SBA equipment loans typically are for 10 years or the “useful life” of the equipment being financed
  • Longer loan terms almost always lower the monthly loan payment
  • SBA loans are fully amortizing, which means no balloon payments
  • If you are consolidating debts, it is possible to have one loan for many refinances, making just one payment to the bank
  • An SBA loan can do more than just lower your monthly payment — it can also be a “catchall” loan that enables your business to roll a few initiatives into one, such as refinancing commercial real estate and purchasing new equipment

If you are wondering how your business would perform after a debt refinance, there are documents you can gather for a quick assessment. The following is a list of materials to compile and present to a lender:

  • Three years of tax returns, personal and for all businesses owned
  • Copies of all promissory notes/loans to be refinanced (be sure to have the executed documents available for refinance review)
  • A year-to-date or trailing 12-month profit and loss statement
  • A balance sheet matching the profit and loss statement
  • Verification that loan statements from the lender match the loan balances on your balance sheet
  • Personal financial statements for guarantors

This information, along with a conversation between an SBA-approved lender with industry expertise and your company’s decision-makers, will be helpful in deciding if SBA financing is the right fit for your hotel’s future.

Our Presentation at the 2017 AAHOA Convention & Trade Show

Jonathan W. Smith, our Senior Vice President, Director of SBA Lending spoke recently at the 2017 AAHOA Convention & Trade Show in San Antonio.

Watch the video to learn more about our SBA hotel lending expertise.

Our Loan Expertise Across Industries

Our decades of experience includes loans across a wide range of industries — even in perceived higher risk categories like restaurants, independent hotels, car washes and gas stations.

Request an Appointment

To get started, contact our SBA team at sbaloanrequest@northeastbank.com or 207.440.2404.

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