As consumer demand for hotels remains strong, hospitality projects keep multiplying. These projects include not only new construction, but also renovations and brand conversions as existing hotels work to stay competitive. More hotel projects mean more loan applications to fund them, and some hospitality lenders find themselves struggling to keep up.
An often inefficient process
For both the borrower and the lender, the hospitality lending process can be a long and convoluted one that often takes several months. Inefficiencies in collecting borrowers’ information drive much of this delay. Common obstacles impeding the application and approval process include:
- 1. Both borrowers and lenders find it difficult to gather and submit the needed information in an organized format.
- 2. Often borrowers must present their information more than once—to the originator on the front end, and then again to the underwriter later in the process.
- 3. The industry lacks a standard format for borrower information. Borrowers present their data in various formats, and lenders differ in the information they request.
- 4. It can be difficult for lenders to get the “full story” behind the loan application from the beginning. Borrowers sometimes struggle to communicate this story in a way the lender understands.
A tool for expediency
What borrowers and lenders both need is a way to make collecting, organizing, and presenting borrower information efficient, consistent, and easy. Fortunately, technology with this capability exists; the commercial real estate industry simply needs to leverage it.
Other industries (and even the college application system) have been using platforms designed to suit their specific needs for years, so why is commercial real estate lagging behind? The industry needs an online marketplace for hospitality financing where borrowers can input all of their information and distribute it to multiple lenders in a meaningful way. Information that lenders typically request—including the borrower’s global portfolio, personal financial statement, affiliate information, and even his/her business case—would be stored in one centralized location. Authorized users within a lending group could then be provided access to that information, so the borrower would not have to provide it multiple times. As an added bonus, having all data and documentation readily accessible online would make compliance much easier for lenders.
Cutting the process time in half
CrediVia offers the platform the commercial real estate industry has been missing. By taking advantage of technology that other industries are already implementing, the typical time spent processing a commercial real estate loan can be cut by at least 50 percent—thus allowing lenders to double their closing rates. Initially launched in the hospitality space, the CrediVia portal will soon be extended to other asset classes in commercial real estate.
Borrowers, too, can benefit from the time savings the CrediVia portal affords them. Once they have entered their information, they can go back to focusing on their portfolios and finding ways to drive more revenue to their bottom line.
In boom times for the hospitality industry, borrowers and lenders alike must make the most of the many opportunities awaiting them. It’s time to take advantage of the latest tools to close more loans, faster.