This customer signed a purchase agreement by winning in an auction and started the financing process in multi directions. First through many lenders referred to the buyer by the listing agents. Second by brokers that the buyer had communications in the past. Third by searching online and googling for hotel lenders which is how he found the Scientific Capital. One of the lenders who was referred to this buyer through the listing broker was a national non-FDIC SBA 504 lender who had offered higher interest rate of 5.5% going adjustable the beginning of year 5 and high prepayment. While the buyer was working with this lender the buyer asked Scientific Capital to obtain a loan with lower rate and no prepayment penalty. Scientific Capital was able to obtain a loan with 3.9% rate fixed for 10 and no prepay. The national SBA lender had offered the buyer an interim loan through another lender at higher rate of 7%+ and multiple points while Scientific Capital’s offer on the SBA interim loan was at the same rate of 3.9% and at half point with no prepay.

Scientific Capital was able to also find non-SBA conventional loan at 65% to 75% for this hotel and as such conventional financing is available for those buyers who prefer conventional loans in this market. The main requirement of course is the sufficient cashflow and Debt Coverage Ratio. Many lenders require a higher Debt Coverage Ratio of 1.35+ after considering a reserve of 4% for larger transactions.