Hotel Financing Needed
Need a little advice/insight:
I currently have 25% down payment raised for the construction of a new 40 room, limited service hotel in Minnesota. I have the franchise agreement signed, TIF Financing secured, land purchased and architectural drawings almost completed. But when I first started out raising funds 1.5 years ago, my loan officer quoted me a 125% limited personal guarantee for each investor (Meaning if you put in 100k and the project was a total loss, that person would lose their 100k and be required to inject another 125k). Now that I have the money raised 1.5 years later, that loan officer has changed jobs, I got a new loan officer, and they won't do that limited personal guarantee. We are a smaller town with two banks that do commercial lending, and one of the banks was the bank originally doing the deal. The other bank said it was too big of a project for them.
We have looked at doing the SBA 504 program, but then somebody has to sign off on the entire SBA loan, which will be difficult for me to find somebody to do, as they all are under the assumption of the 125% limited personal guarantee.
Any help with banks that specialize in hotel financing would be wonderful.
Can you send me a executive summary of your project. I may have a lender that fund this type of project.
Just sent the info. Let me know if it was received. Thanks!
Hi Kyle,
I'm impressed that you had your local bank on board for the terms you mentioned - limited recourse and 75% LTC. LTCs are trending much lower than 75% nationally with banks.
Are you open to exploring private construction loans (non-bank lenders)? Often what we see is the rate is more expensive, but they are more aggressive on LTC, and can get their head around a deal and close faster, with less red tape.
Hey Tim,
I am open to all ideas. My one concern would be that I need a bank that will do the construction financing and the permanent financing once it's complete. I also need the 125 % limited personal guarantee's.
Thanks!
Kyle