Lumberjack, Tailor, Counselor, Host: A Hotel Owner Does It All in the Pandemic


Over time, having fewer guests created fresh peril with lenders. Rather than take out a traditional bank loan for his Hershey property, Mr. Patel had borrowed from Wall Street, attracted by terms that did not allow for the seizure of his personal assets in case of a default. It turned into a nightmare. The commercial mortgage-backed securities loan was controlled by a contract with onerous terms that were almost impossible to change.

Mr. Patel worried that if he fell behind on payments, the property could be seized by investors who held the bonds that his loan was packaged into. In June, desperate for help, he visited the Federal Reserve’s website and read about a program that the central bank had revived — the Term Asset-Backed Securities Loan Facility, or TALF — to prop up the financial markets.

When he saw that the program, created during the 2008 financial crisis, was meant “to support the flow of credit to consumers and businesses,” he wondered: Could that help him get short-term relief on the Hershey loan? No, as it turned out; TALF was designed to help bondholders by lending them money in exchange for bonds like the one linked to the Hershey property as collateral, but it offered no relief to the actual borrowers.

Mr. Patel worries that he may lose the Hershey property. He has set aside $200,000, taken from his company’s other holdings, to pay the $60,000 monthly shortfall he expects to face starting in November, for four months. After that, only another round of aid from the government could keep the property afloat.

He is also finding it harder to deal with traditional banks, which typically have more straightforward loan terms but became stricter during the pandemic about negotiating changes to existing loans and even with disbursing what they had already agreed to lend.

In early August, Mr. Patel’s biggest lender asked him for a 12-month “pro forma,” a detailed estimate for how his business would perform over the next year, a monumental request considering how uncertain the future remains. On the morning he had to make a bullish case to the loan officer about the hotel business, the dissipating winds of hurricane Isaias had knocked down the tree in his Hampton Inn parking lot in New Jersey, forcing him to grab a chain saw.



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