Refinance and Consolidate Debts with SBA

Hotel Loan of over 5 million in Texas

Comfort Inn
Irving, TX

With the refinance project starting in September of 2013, a year long endeavor marked the most challenging transaction for the Scientific Capital. It required re-structuring of the financials, the corporate structure, and other advisory actions to stage the project for the refinancing.

Like many hoteliers who went through extraordinary circumstances in 2009 to 2012 timeframe, the SBA 504 deferments obtained were having a serious burden on this client. Those deferments are to be paid on top of the two 504 loans within five years increasing the monthly payment significantly. Many Texas hoteliers have paid their property tax by borrowing from the TaxEase Corporation in the tough economy of the past few years. Since these loans are shorter term and have higher interest rate, it further burdens the cash flow of the hotels. Consolidation of these loans to into one with lower interest rate and a twenty five year amortization surely lightens the cash flow constraints.

Another twist with the SBA loans is that refinance of an existing 504 loan with a 7a requires GP approval which means that the SBA has to underwrite and approve the loan. In many cases these loans are declined. Only with the expertise and the knowledge of the Scientific Capital, the decline decision in this case was reversed when Scientific Capital was able to appeal the SBA’s negative decision and argue the borrower’s qualification by referring to specific SBA rules in the Operating Procedures guide.

This project was originally structured as Pari Passu in which SBA 7a of 5 million and a commercial loan of 100,000 were structured in the first position to reach the required 5.1MM level, but later with the drop in the loan balances a standard 7a loan at 5 million was sufficient to pay off all debts. In many projects, Scientific Capital is able to structure the debts as Pari Passu to reach higher loan amounts in excess of the 5 million SBA allocation.

In this project the borrower was able to consolidate both SBA 504 loans, all SBA deferment loans, all business lines of credit, minor hotel PIP improvement costs, and the TaxEase notes.

What Our Client Thinks of Us

Wow! What can I say. Like most hoteliers, we have been through a lot over the past few years. Buying our hotel at the peak in 2007, putting significant capital into a renovation in 2008, and going through the recession starting 2009, has been having significant impact on our family. Through all of these hard years, our family had to continually pick up loans with high interest rates that ate away our profits. Fighting our way through all of this has made us stronger and smarter hoteliers, but we were still barely keeping afloat. That’s when I contacted Ramin in September of 2013 and told him our story. I explained to him the significant credit and liquidity issues we faced and asked if he thought there was a way we could refinance and get our mortgage down to where it should have been all along. Thus began a rigorous journey that lasted almost a year. He walked this 26 year old young hotelier who had zero knowledge on how to get a loan through every aspect of the finance world. He helped me with the credit reports and got our business financial statements in order. He used his contacts to get us a deal that would get my family and I out of this financial nightmare we were in. He argued with bank that we were credit worthy clients after they initially declined us. Once the bank finally approved us, we needed approval from the SBA, which he once again had to fight on our behalf. He appealed the SBA’s decline even when the bank thought it was a waste of time to file the appeal. He never stopped working and would constantly keep me in the loop of what was going on. We finally closed the loan last week and I can say that it truly might not have been possible to achieve it without Ramin and the Scientific Capital. If you need help with getting a hotel loan all I can tell you is to call Ramin as he will fight to get you a fair deal.

Thanks to Ramin we have formed a partnership with him that will continue to thrive now and well into the future!

Jaskaran Malhan