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Financing / Financial Assistance FAQs

This section outlines answers to frequently asked questions on financing and financial assistance programs. If you have a question, complete and submit the form at the bottom of the page and someone will get back to you with a response.

SBA Option Questions

Is there any relief available for existing small business owners with current
Yes, at this time the SBA can provide up to six months of deferred payments on your current mortgage with the SBA. It is also allowing six-month payment deferrals on SBA 7A loans not sold on the secondary market that are in good standing. If you have an SBA 7A loan that has been sold on the secondary market, a term of at least 90 days will be offered.
In the past, it was a difficult process to apply for an SBA Loan. What are they doing to make this process easier during this time?
The Small Business Administration understands the need for capital during this time, so they are loosening their eligibility rules and streamlining the process. They are trying to make it available to as many small business owners as possible.
What other measures are being taken to help franchisees being affected by the pandemic?
Choice has been a huge advocate for our franchisees on Capitol Hill, speaking directly with the President, Vice President, House and Senate leaders, and other Administration officials. We’re driving forward federal, state, and regulatory relief and stimulus measures that will have the greatest impact in providing financial relief to our franchisees, including directly expressing needed regulatory changes and measures. We’re also collaborating with the White House, the Treasury Department, and Congress to maximize the benefit of SBA loan programs for Choice properties — including 7(a) loans and disaster loans—to increase loan limits, guarantee percentages, and waive loan fees.
Can an LLC that doesn’t have a 20% owner qualify? Do all owners need to guarantee?
The managing member of the LLC would need to qualify. If it’s a corporation, either the president or the person who makes the decisions for the business concern/entity.
Will I have to use my personal property as collateral if I apply for the SBA Disaster Loan?
The SBA disaster loan does not require collateral at this time. The loan currently under the stimulus bill will mimic SBA 7a in regard to collateral. If equity is available, whether it be a second or third mortgage, they will look at the collateral to secure the loan. If the collateral is not sufficient for this new loan they can not decline the loan.
If I used my hotel as collateral for my current SBA Loan, can I use it for the SBA
Disaster Loan too?
They will require documentation to back up the loan if the collateral is not available this would also include if there covenants in place by the first mortgage lender that will not allow for subordinate liens.
I run a seasonal hotel. Can I apply for the SBA Disaster Relief Loan? If so, what am I required to submit with my loan application?
Yes, you can still apply for the SBA Disaster Relief Loan. You will need to submit year-end 2019 financials and interim statements at this time due to the pandemic.
My banker told me that an emergency SBA loan will default my conventional loan. Is this true? If so, do I have other options?
It depends on the terms of the conventional loan. Review your loan agreement. If there are covenants in place that will not allow a junior lien on the collateral, the SBA cannot decline your loan for the new stimulus loan. If the agreement states that you cannot increase debt obligations or if there are debt coverage requirements in the agreement, it potentially could trigger a default. You should discuss with your conventional lender whether a modification can be made that will allow an agreement to provide working capital.
Are all states and counties are eligible for COVID-19 loan?
Yes, with the passage of the CARES bill, all states and counties are eligible.
What does the CARES Act mean for someone with a current SBA 7A and SBA 504 Loans, the second mortgages?
  • The SBA will pay (not defer) six months of principal and interest payments for SBA 7a and SBA 504 second mortgages for existing for small business owners.

  • After the six months of payments made by SBA with the allocated funds, you will still have the ability to defer payments up to six months if needed for SBA 504 loans and SBA 7a loans not sold on the secondary market. Payments on SBA 7a loans sold on the secondary market can be deferred for 90 days. If you have already been approved for deferment of loans for SBA 7a or SBA 504, your loan payments by the SBA will be still active after deferment.

What do I have to do to take advantage of this relief for existing payments?
As long as you have an active SBA loan that is not in a default situation that has a loan authorization SBA number, the SBA will disburse the money to the lenders and CDCs for each loan, totaling six months of payments.
If I am not a U.S. citizen, can I still qualify for the SBA loan programs?
Currently, SBA products require that 51 percent of the business be owned by U.S. citizens or legal permanent residents (LPR).
Can I use the SBA Disaster loan to re-amortize a non-SBA existing loan for the hotel mortgage to extend the loan out 20 or 30 years to lower the payments?
No, disaster loans must be applied to the current expenses that remediate the current impacts of the COVID-19 virus, (such as payments on mortgages, payroll, and operating expenses).

Other Funding Sources

What if I have a traditional or conventional mortgage loan, is there any help for me?
At this time, the FDIC has not set any guidelines for its lending partners. However, it is asking lenders to look at alleviating some payment pressure through deferment, interest-only payment, or forbearance. You should contact your lender to discuss your options.
What changed in the NOL net operating loss section?
The limitations of a company’s use of losses are relaxed. the taxable income limitations are removed and allow an NOL to fully offset income.These changes will allow companies to utilize losses and amend prior year returns, which will provide critical cash flow and liquidity during the COVID-19 emergency. An NOL arising in a tax year beginning in 2018, 2019, or 2020 can be carried back five years

CARES Act: Employment & Payroll

What is the definition of payroll?
The sum of payments of any compensation to employees, including:

  • Salary
  • Wages
  • Commissions
  • Cash Tips
  • Vacation Pay
  • Parental Leave Pay
  • Family Leave Pay
  • Sick Leave Pay
  • Allowance for dismissal or separation
  • Group health benefits including insurance premiums
  • Payment of retirement benefit or payment of state or local tax assessed on the compensation of employees.
  • For sole proprietors or independent contractors, the sum of payments of any compensation to or income that is a wage, commission, income, net earnings from self-employment or similar compensation, that is in an amount of not more than $100,000/year as prorated for the covered period.
What are the forgiveness components of the Paycheck Protection Plan or PPP loans?
Documentation includes payroll tax filings reported to the IRS, State Income, Payroll, and unemployment insurance filings. Other documents include canceled checks for covered costs, payment receipts, transcripts verifying lease, rent, and utilities. There must be accurate documentation of what the loan proceeds were used to pay with the PPP loan. Loan forgiveness may be denied if the documentation is not complete and accurate.
Can I use the PPP loan for other expenses?
Yes, the loan has been approved for the following expenses:

  • Paying payroll costs as defined
  • Payments of interest on mortgage obligations or other debt obligations (no prepayment penalties or principal)
  • Rent (including rent under a lease agreement)
  • Utilities
The employee retention credit is part of the CARES Act. What are the details of this new credit? What is and is not covered? How do I apply?
It allows a refundable payroll tax credit for 50 percent of wages paid by the employer during the COVID-19 crisis. The credit is available to employers whose operations were fully or partially suspended or gross receipts declined by more than 50 percent.

It is provided for wages paid or incurred from March 13, 2020, to December 31, 2020. The credit is based on qualified wages paid to the employee. For employers with greater than 100 full-time employees, qualified wages are wages paid to employees when they are not providing services. For eligible employers with 100 or fewer full-time employees, all employee wages qualify for the credit, whether or not the employer is open. The credit is provided for the first $10,000 of compensation, including health benefits, paid to an eligible employee.

Businesses who receive an SBA Paycheck Protection Loan are not eligible for this credit. The application process is managed through the IRS.
What other items are part of the CARES Act?
Advanced funding allows employers to receive an advance tax credit for required paid sick leave. You do not have to wait for reimbursement.

Delayed payment of employer payroll taxes: The provision allows employers and self-employed individuals to defer payment of the employer share of the Social Security tax they are otherwise responsible for paying to the federal government with respect to their employees. The provision requires that the deferred employment tax be paid over the following two years, with half of the amount required to be paid by December 31, 2021, and the other half by December 31, 2022.
What is the Qualified Improvement Property (QIP) section of the CARES Act?
This provision enables businesses, especially in the hospitality industry, to immediately write off costs associated with improving facilities, instead of having to depreciate those improvements over the 39-year life of the building.

The provision, which corrects an error in the Tax Cuts and Jobs Act, not only increases access to cash flow by allowing you to amend a prior year return but also incentivizes you to continue to invest in improvements as the country recovers from the COVID-19 emergency.

The provision covers costs associated with improving facilities (for example interior improvements, which include but are not limited to investments in new lighting, flooring, sprinkler systems, woodwork, and other common business improvements.)

The CARES Act also allows you to amend a prior year’s return using this rule.
How did the CARES Act change unemployment benefits and eligibility?
  • The CARES Act expands the size (adding $250 billion) and scope of unemployment benefits.

  • Nearly every employee in the country is eligible, categorized as employees who are unable to work for reasons related to COVID-19.

  • Qualifying examples for being unable to work include:

    • An individual who has been diagnosed with COVID–19 or is seeking a medical diagnosis for symptoms;

    • A member of the individual’s household has been diagnosed with COVID–19;

    • An individual is providing care for a family member who has been diagnosed with COVID–19;

    • A child or other person for whom the individual has primary caregiving responsibility is unable to attend school as a direct result of COVID-19;

    • An individual unable to reach a job, is forced to quit a job, or the place of employment is closed as a direct result of COVID–19.This also includes relief for workers who are self-employed, as well as independent contractors.

    • Individuals with the ability to telework or who are receiving paid sick leave or other paid leave benefits, are ineligible for these benefits.Provisions apply retroactively to January 27, 2020 and expire July 31, 2020

Who is eligible for the Qualified Improvement Property (QIP) section of the CARES Act?
Any business that made or is planning to make improvements to facilities.

Other Resouces

What has Choice been doing during this time to assist franchisees?
  • We appreciate the commitment that you have to your staff, guests and communities, and we are taking action to support you with tools and resources to assist with daily operations, to help address issues impacting guests, and ultimately to help mitigate long-term impacts.

  • We’re suspending a variety of fees, including interest on past due balances since March 1, 2020, as well as reputation management fees and guest relations handling fees. We’re assisting you in managing guest reservations and cancellations.

  • We’ve paused Quality Assurance reviews through June 30, 2020, and have paused Property Improvement Plan inspections through December 31, 2020. We’ve suspended certain brand standards, created more flexible options, and are moving deadlines to reflect the evolving travel environment.

  • They plan on advancing during the application process $10,000 and this will not have to paid back if the applicant is not approved. If approved, it will, of course, be part of the total EIDL loan.

  • We’re continuing to provide you with guidance and best practices on crisis preparedness, including specific prevention procedures, proper disinfection protocols, etc.

  • Choice has been a huge advocate for our franchisees on Capitol Hill, speaking directly with the President, Vice President and many in Congress. They’re asking for changes to be made to SBA loans process that would allow our franchisee to utilize the program in the deployment of capital in a timely manner.

Where can I find local community resources?
Each state has a “.gov” website. For instance alabama.gov. Find the link to the economic development area for your state.

List of U.S. State portals
How can I make sure I have the latest information from Choice?

Make sure to check back often; we are providing updates through many channels, including:

Choice Hotels Financial Contact

Vernell Burwell, Choice Project Director Lending and Land Acquisition

Resourceful, highly ethical, Commercial Banking/ SBA /Conventional Loan Professional with extensive experience in Finance, Franchise Development, and Management. Proven track record in business development, Banking and lender prospecting, transaction structuring, product cross-selling, and customer relationship management. Cultivates and manages national banking relationships across industries and property types. With over 20 years of industry experience as a top revenue-producing financial professional who does not easily take “no” for an answer.

Vernell Burwell can also facilitate your needs when it comes to lender resources. You may contact her by submitting your question(s) below or you can review our frequently asked questions on financing and financial assistance programs.

Email Your Questions here

Financing & Financial Assistance FAQs

Updated on January 26, 2022

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