USDA Financing to the Rescue

Best Western Hotel Mentor, Ohio

Challenge:

The borrower’s family had owned the collateral property since 1978. At initial contact with Ocean Capital, the borrower held two existing mortgages on the property. In early 2008 he was informed that his first mortgage had been sold several times to different banks and in the process the current bank had lost pertinent account information. This made it difficult to verify the status of the account and the payments made, and in turn the bank was demanding payment of the note. As a result of the circumstances stated above and lack of account information, the local bank and other lenders were unable to provide the desired financing. The borrower found himself in a difficult situation and needed to locate a lender that would work with him and his current mortgage holder in order to refinance both mortgages. In addition, the monthly payments on the two mortgages were extremely high and needed to be lowered so that the borrower could continue with his family’s tradition of reinvesting cash flows back into the hotel grounds.

Solution:

The borrower worked with a broker who then researched lenders who specialize in lending to rural property owners. The broker found Ocean Capital on a commercial lending database. With considerable experience in USDA lending, Ocean Capital put together a USDA Business & Industry package that paid off the borrower’s two mortgages and lowered the monthly payments significantly. While other lenders found reasons to turn away this perfectly good borrower, Ocean Capital performed the up-front work and due diligence necessary for financing to be extended.

Results:

In October 2008, the borrower closed on a USDA Business & Industry loan for $2.5MM. As a result, the Best Western was able to drastically reduce their monthly mortgage payment, saving the company over $10,000 per month. Due to the drastic reduction in his monthly mortgage payment, the borrower found himself on much more solid financial footing and had the ability to continue his family’s tradition of reinvesting.