EIDL loans are now readily available to hoteliers up to $150,000 per property. Borrowers should be aware, however, that CMBS servicers are not approving these loans by waiving any covenant violations in CMBS loan agreements. Below is a typical servicer response to an EIDL approval request.
We have received your request that the Borrower be able to obtain a loan from the SBA pursuant to the SBA’s Economic Injury Disaster Loan (EIDL) program.
We do understand and appreciate the unprecedented times everyone is experiencing, and we have worked on creative ways to help our qualifying borrowers address the business challenges created by the COVID-19 Pandemic. For example, we have developed a process to allow qualifying borrowers to participate in the Paycheck Protection Program without violating provisions in their loan documents, and we have also developed a process that provides qualifying borrowers a forbearance period of up to sixty (60) to ninety (90) days. However, the same features that make a CMBS loan attractive at loan origination are the same features that are preventing us from allowing CMBS borrowers like you to obtain an EIDL loan. For example, prohibiting a CMBS borrower from obtaining additional secured debt avoids (i) the diversion of cash flow from the collateral property that might otherwise be available to repay the CMBS loan, (ii) a competing creditor if the CMBS borrower files a Chapter 11 bankruptcy, (iii) solvency concerns about the CMBS borrower and nonrecourse carve-out guarantor if the additional secured debt is not repaid, etc.
We are very sorry that we cannot approve your request and wish you the best as we all move through this difficult time.