Looking for some help

Bed & Breakfast / Short Term Rental Host Forum

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I'm a little stumped...why would they ask a question like that? Usually its..how much equity do you have? How's your credit? How much cash reserve do you have? How much do you have to put down? Show me the business plan. I had 0 experience in the hospitality business but successful in other endeavors. I have always used smaller local banks and actually have relationships with 2..
I wish I could explain the questions they ask! The VP we are working with has always said he was optimistic that they could get this deal done for us and each trip to the loan committee has come back with more questions. We have had to educate them all about BnBs and why many have prospered during this pandemic vs many hotels. Our restoration project of the school is no small project. When we started looking for funding, the total project cost was about 1.7M, pre covid. Our latest updated cost structure added about $350,000 to the total. We have invested almost $500,000 of our own money. Our credit scores are north of 700, cash reserves are a little low but we have close to $700,000 state & federal tax credits when the project is complete that can be monetized. Because of the cost, the SBA/USDA are our best options. Our projected revenues are conservative and inline with the area, we worked pretty extensively with our SCORE advisors to put these figures together. Even with the increased costs, our debt service ratio is greater than 1 for the first year and gets better in yrs 2 & 3. Our local smaller banks, where we started are mostly agriculture/home lenders and have no experience in hospitality lending. The one local bank who really saw this project as a exciting project and was in until he approached his loan committee and found out that even if they wanted to, they could not lend to hospitality venues, something in how their bonding is structured.
 
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Ask them how much experience they had in banking when they graduated from college. OK, I know you cannot but it is basically the same thing since you have taken Aspiring classes.

You need to prove you are a financial risk for the loan. You have a business plan, concept, and financials - what more is pertinent? You could ask ALP (Association of Lodging Professionals) if they have any studies/Polls that show the current trends in travel and B & B in particular.
We have worked with ALP to get current trends
 
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Yes...7 months in it may be time to find another lender.
Our broker has contacted over 100 prospective lenders. We have been told many times that pre covid we would have been funded. As well, there have been many underwriters/loan officers that think this is an awesome project, they would love to come stay with us but when it comes to the loan committee, there is always one or two on the committee who have doubts. Many lenders are still hesitant on hospitality lending. We did have a bank 4 months ago who was 95% on board to fund us and they work with a 3rd party construction mgmt firm who would oversee the project and disperse the funds. Prior to the intent to lend letter was to be sent to us, they found out the firm was not licensed in our state and it was not worth their time to obtain the license and the bank did not want to work with another firm who was licensed so the deal fell through. This 7 mo lender could have easily said no a long time ago, they are probably #4 largest SBA lending bank, so until we reach that point with them we will hang in there with them. Keeping our fingers crossed and praying that they are still in the game!
 
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Yes it is q
We had to go through three lenders and 10 months before we got our financing. It is an incredible gauntlet to run. Good luck and keep plugging away.
Thanks for the encouraging words! It is quite the gauntlet and we have had so many good things said by many in the lending community that we are not about to give up!
 

TheBeachHouse

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Tie your pre ious experience into hospitality. My college degree was in liberal arts but my career was in financial services. It’s about skill, learning and aptitude. Not always background. We emphasized hubbys background in retail management and mine in marketing. Find a tie in. We also emphasized out experience in restaurant services even though those experiences were when we were students, a generation ago.
 
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