Changes in hotel loans
Business loans are created individually for each industry. One form of business loan is the hotel loan made to the hotel and motel industry. These loans are given to people who want to start a hotel or make improvements to the current state of their existing hotel business. In the past, there were many financial institutions that provided business loans for the hotel and motel industry. Today many of these financial institutions are in trouble and want to see an exemplary business plan that will ensure that the borrower can repay any given loan within a specified period of time.
If a borrower defaults on their business loan, a business loan modification is recommended. With declining tourist traffic, many hotel and motel owners are unable to keep up with current loan payments. In this case, lenders will usually decide to accept a hotel loan modification to remove the delinquent loans from their books. A hotel loan modification will typically rework loan repayment schedules, lower interest rates, and lower monthly payments for the borrower. A hotel loan modification contract will be drawn up with the new terms and conditions stipulated and signed by both parties.
Hotel lenders are familiar with the hotel and motel business and employ experts to review the borrower’s business plan. These experts look for certain business essentials, such as customer availability and the cost of real estate where a hotel is located. Hotel loan modifications are written like any other business loan, but will describe specific areas that apply to the hotel and motel industry. A long-term plan for repayment of the loan is drawn up, which the borrower agrees to abide by. Available loans may be fixed or variable rate, in which the borrower pays fixed amounts at variable intervals, or a lump sum or balloon payment that includes the entire loan and interest payments, respectively.
Smart hotel owners should take advantage of the unusual climate in the commercial lending industry and seek a hotel loan modification.