Are You Making THIS Commercial Borrowing Mistake?

Did you ever know someone that let their ego stand in the way of their own success? A few years ago, we had a client that wanted to borrow tens of millions of dollars for the construction of a 4 star hotel. Here’s a man that spent lots of money to buy the land, get the architectural work done, engineering, MAI appraisals and environmental studies completed. He even developed a better than average business plan and a decent financial model (proforma).

What was the problem? Well, he had a good management background in manufacturing and distribution. He even bought and managed a strip mall and owned a couple of small eateries that turned a profit. But, after he transitioned away from manufacturing and distribution, he ran into some tax problems. Seven digits worth of tax problems. Sure, he regularly made his payments, but it still looked bad on his credit reports.

Yet, his tax problems were not insurmountable. He still had a project with potential and some equity in the strip mall and land where he wanted to build the hotel.

Ultimately, what caused his failure to get financing was his insistence on managing the new hotel himself, even though he had absolutely no experience in hospitality. If he had been willing to do what the banks and private lenders suggested, we would have been able to fully fund his development.

All that was needed was to “flag” the hotel with a name brand hotel chain and contract with them to manage and operate the facility. But, he was determined to save the 5% management fee and convince the world that he could do it himself. The last time we spoke with him, he still needed financing and his land remained vacant. A clear case of ego run amok.

Financing for the hospitality industry is readily available for those with good plans and cooperative dispositions. If you need help getting financing for your needs, call us and we’ll see what can be done to move your plans forward.

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You can also contact us to ask questions and voice your concerns. Just pick up the phone and dial, CFIC Funding, Inc. today at 310-370-4871! Ask for David Young or Wayne Clinton. You can also visit http://www.cficfunding.com or mail david@cficfunding.com or wayne@cficfunding.com