The Coronavirus has brought business to a near halt specially for the hospitality industry. We are hoping that we can cope with this pandemic like Chinese did where in a few months, we get over the curve and enjoy the pent up demand for travel. Fortunately, the lenders are aware of the impact on this phenomenon on the travel and the hospitality and are very cooperative in accomodating the hoteliers for payment arrangements. These are the points to keep in mind:

1. Prime rate has dropped to 3.25% as of Sunday 15th of March. This means that for the adjustable loans such as SBA 7a  that are prime based, the new effective rate is 3.25% + Margin. If as an example the Margin of your loan is 1.75%, the new effective rate will be 5.00%. The lower payment will show on the next adjustment period which is generally monthly or quarterly
2. SBA Disaster and Recovery loans could be used for mortgage payments and other hotel expenses such as payroll. First the hoteliers have to search and see if the hotel is located in an eligible county. Then the hoteliers can apply directly online and received up to 2 million dollars in low interest rate loans. The list of eligible states and counties change daily and so the hoteliers have to check their hotel location everyday. To check if the hotel is in eligible area and to apply for these loans go to: https://disasterloan.sba.gov/ela/
3. The most immediate help could be from the lenders who would offer deferments for a few months. In case of SBA loans the hotelier may receive up to 6 months of deferment. Deferment refers to waiver on making payments for a few months and as such it helps the most when revenues have dropped significantly. If you have a SBA 504 loan, then you can apply for deferment to the bank for your first loan and to the CDC that processed your SBA debenture loan for the SBA deferment

Please contact Ramin Mostaan with any questions on the inforamtion provided in this news letter.