In the small commercial mortgage industry, there aren’t many lenders who are interested in providing hotel financing. The hospitality industry can be tricky to navigate, so these loans are often seen as too risky. However, APEX Mortgage Corp. does provide small commercial mortgages for hotels and motels. If you’re a commercial broker working with borrowers who need financing for hotel or motel properties, here’s what you and your borrowers need to be prepared to discuss.
- Understand your borrower’s credit. Your borrower’s credit is an important tool for a small commercial mortgage lender when deciding whether or not to finance a loan request. You and your borrower need to understand and be able to discuss the credit report. Be sure the lender has a recent report with up-to-date information when evaluating the loan scenario. Prepare your borrower is to discuss any financial issues that appear on the report, like account delinquencies or bankruptcies.
- Get acquainted with the property. Understanding the facts about the building being pledged as collateral is very important to securing your borrower a commercial mortgage loan. How big is the hotel or motel? Where is it located? What is the occupancy rate? These are all important pieces of information your lender will want to consider.
- Know your borrower’s capacity to pay. All small commercial mortgage lenders are going to want to make sure that a borrower can make their loan payments. Provide your lender with relevant financial information, such as a profit and loss report or an income and expense report. A completed 1003 or a detailed personal financial statement will also give your lender a good idea about the borrower’s ability to pay. Again, make sure you know the hotel or motel’s occupancy rate.
- Know your borrower’s plans for the money. A small commercial mortgage lender will want to know how your borrower plans to use the funds. Whether it’s purchasing a hotel or motel, or refinancing a mortgage to improve an already existing business, the more information you and your borrower provide the small commercial mortgage lender, the easier it will be to obtain a commercial mortgage for the hotel or motel.
Providing your small commercial mortgage lender with this information is very important when working to obtain a commercial mortgage for a borrower with a motel or hotel property. You and your borrower need to be able to discuss the credit score, property information, ability to repay and use of funds with the lender. If you are both able to have conversations about the above information with a lender, your borrower has a better chance of getting the hotel financing they need.