The
financing of this hotel had one major twist, the borrower had no down
payment to buy this hotel. We then used his other hotel, the Rodeway
Inn of Niagara Falls as required collateral to meet the required global
Loan to Value. With the latest SBA rules, the total loans on both
hotels have to be at maximum of 85% of the total REAL ESTATE value of
both hotels. This means that we were able to obtain 103% loan to
purchase price (include all costs of the loan into the loan) on the
Econolodge, refinance the Rodeway Inn's existing seller carry loan with
a new SBA 7(a) loan and use the additional remaining collateral in the
Rodeway Inn towards the down payment of the Econolodge. This
essentially means that if there is sufficient collateral in other
assets, a 100% financing is definitely possible for purchase of a
hotel.