Rural Hotel Owner Seeks USDA Financing

La Quinta Inn Hattiesburg, Mississippi

Challenge:

In 2006, the owners invested approximately $1.8MM to upgrade the property in compliance to the La Quinta Inn Property Improvement Plan (PIP). Soon thereafter, the borrowers received notice that their loan was going to balloon in less than 6 months. The borrowers needed financing to payoff the debt before the note became due and also to complete improvements required by their franchise. Their current mortgage holder was no longer willing to lend on hospitality properties, and the borrowers needed to develop a new relationship with a stable lender that was familiar with their unique business type.

Solution:

The borrowers approached 3 other nationwide lenders, and ultimately selected Ocean Capital due to their extensive experience lending on properties located in rural areas. Ocean Capital put together a USDA Business & Industry loan for the La Quinta Inn which specifically targets rural properties. The USDA loan paid off the current lender and replenished their working capital account to meet their current franchise requirements.

Results:

In May of 2009, the borrower closed on a USDA Business & Industry loan with Ocean Capital for $4MM. As a result, the La Quinta Inn was able to lower their monthly payments, receive working capital, and establish a Furniture, Fixtures and Equipment reserve account to be used for future improvements required by their franchise. Ocean Capital recognized the borrower’s need and delivered a loan program which saved them over 10% per year in payments while giving them reserves for the future.