CMBS conduit loans are temporarily unavailable for hotels until operating performance recovers from the effects of COVID-19. In the meantime, to assist clients and borrowers, ValueXpress is providing SBA 7(a) loans up to $5 million on all owner-operated hotels, including independent hotels. The loans are co-underwritten with a community bank in Mississippi that is aggressively expanding a nationwide SBA 7(a) origination platform.
A strong incentive is currently in place for SBA 7(a) borrowers to close SBA 7(a) loans as the SBA is paying six months of loan payments for new and existing borrowers for loans closed by September 27, 2020 (click here for more information). Although SBA 7(a) loans have 25-year self-amortizing terms, they are also effective bridge loans due to their borrower friendly prepayment terms. SBA 7(a) loans have a 5%-3%-1% step-down prepayment penalty for the first three years of the loan term. After 24 months, a borrower can exit the loan with a 1% fee, essentially no different than any other bridge loan.
“Our clients facing loan maturities during this difficult time in which their existing lender may not have an interest or ability to refinance their hotel loans are turning to the SBA 7(a) program as a short-term solution until the CMBS market for hotels recovers,” commented Michael Sneden, Executive Vice President at ValueXpress. To obtain an SBA 7(a) loan quote, contact a member of the ValueXpress team: Mike Sneden (firstname.lastname@example.org), Dennis Suh (email@example.com), Gary Unkel (firstname.lastname@example.org) or Jay Bhakta (email@example.com).