The index used is generally PRIME. The determination of the rate is dependent on the hotel, the sponsors, and the geographic location of the hotel

There is less appetite for our national lenders to fund smaller loans. However, for strong projects, we do consider loans below 1million

The determination of the Loan to Value is dependent mostly on the hotel and the geographic location. However, strong sponsorship is an additional factor considered by our lenders. It is important to note that some lenders go to 80% to 85% but of the real estate (value that is not including good will and FF&E)

Generally conventional lenders such as banks do not require reserves

Upon signing of the Letter of Intent issued by our lenders, the borrowers will send in a good faith deposit to our lender (no fee is collected by Scientific Capital). The Lender uses this deposit to order the third party reports such as the appraisal and the Phase I report. Any balance left from this deposit will be applied to the closing costs. This deposit will generally appear on the closing statement

The prepayment is generally declining 3 or declining 5 although there are different variations depending on the source we use

The cost estimate includes the following items:

• Lender processing fee: 1K to 4K
• Appraisal and the review: 4K to 6K
• Environmental Phase I report: 2K
• Survey: 2K to 3K (Only if a copy is not available)
• Lender legal fees: 2K to 4K  (only if lender uses outside closing attorney)
• Misc such as credit reports, tax services, UCC search, etc.: $500 to 1K

Rates are lower and fixed

Rates are generally fixed for 3 to 5 years

Costs

Lower costs compared to other types of hotel loans

Processing

Less paperwork intensive and easier underwriting compared to SBA or CMBS program

Maturity

Generally the terms are five and upon the maturity of the loan, the borrower has to refinance. Some lenders do provide 10 year terms but the loan resets at the fifth year or becomes adjustable

Underwriting