Hotels with Pools should be eligible for USDA Stimulus Funds

To:  Department of Agriculture

Tom Vilsack, Secretary of Agriculture
Dallas Tonsager, Under Secretary – Rural Development
Judith Canales, Administrator, Business and Industry Program
Pandor Hadjy, Acting Deputy Administrator, Rural Business & Cooperative Service
Curtis Wiley, Chief of Staff to RBS Administrator, Rural Business & Cooperative Service


In spite of the limitations in the geographic coverage or the loan size, USDA B&I (Business & Industry) and SBA 7(a) programs appear to be the last resort financing vehicles currently available to most of the hoteliers.

B&I loans specially have been very popular for financing hotels in the rural areas as the program guarantee offers the lenders significantly reduced risk exposure. Many lenders sell the guaranteed portion in the secondary market thereby maintaining liquidity to re-lend again for new hotel loans. As an example, a lender can use $5MM to finance $25MM of hotel loans in multiple transactions by selling the guaranteed portion every time.

The American Recovery and Reinvestment Act of 2009 (ARRA) has made available additional funds to the USDA until September 15 of 2010. The B&I program has benefited greatly where the guarantee fee has been reduced to 1% and the loan guarantee offered by the government has been increased from 80% to 90%. Now a lender can use the $5MM to finance $50MM of hotel loans in far more transactions. However, hotels with pools are classified as disqualified properties (Notice Vol 74 No. 141 of July 24th, 2009). It is then expected that the lenders would naturally be persuaded to avoid financing hotels with pools which probably constitute the majority of the hotels to take advantage of the 90% guarantee while the ARRA funds are available.

With credit markets lack of liquidity, losing the B&I would be a devastating blow to the hospitality industry. The petitioners are kindly asking the Department of Agriculture for an immediate action to reverse the prior disqualification for the hotels with pools and to give the hoteliers who are bearing the brunt of this economic downturn a fair opportunity to benefit from a recovery program that was meant to comprise all legitimate business owners. Since the program is only available for one year, any delay in action would cause a significantly adverse and irreparable impact on the hotel industry.

Sincerely,

The Undersigned

The Hotels with Pools should be eligible for USDA Stimulus Funds Petition to Department of Agriculture was created by Hospitality Industry Associates and written by Ramin Mostaan (ramin@scicap.com).  This petition is hosted here at www.PetitionOnline.com as a public service. There is no endorsement of this petition, express or implied, by Artifice, Inc. or our sponsors. For technical support please use our simple Petition Help form.