Example Of Case Study On Loan Assessment

The primary borrower in this case is Happy Jack though they will share responsibility with other family members who have shares in the hotel.

The Big Jack must guarantee the loan personally since the company is registered under his name.

The total of loan jack is requesting is $ 1.3 million.

The borrower would like to pay not more than $ 12,000 per month.

106/100 * 1300000/12000 = 115 months or 9 and half years.

The collateral will be guarantors and the hotel ownership documents

Within a day or two
The approach can be arranged as follows;
Sales approach
Income approach
Cost approach
The improvements will help to improve room rates and also increase occupancy. One can know how money will spent through looking at the proposed plan.

Other than attracting tourists, the hotel can offer lower rates to the local people to increase their occupancy.

Cash flow for 2011 and 2012 in million dollars
2011 2012

Starting cash 0 0

Cash in 750 500
Cash out 637 291
Ending cash 113 221
This means the hotel will only be able to pay $12,000 in 2012 but not 2011.
Occupancy rate will be no. of rooms’ occupied/total rooms x100
32/80 = 0.4 x100 = 40%

Unemployment rate

2010 9.6 10.6 12.2
2011 8.9 9.7 12.3
2012 8.1 8.3 11.9
2013 7.4 8.1 11.1

SALES TAX IN MILLION DOLLARS

2010 191 6.2 1.32
2011 198 6.3 1.34
2012 200 6.5 1.36
2013 207 6.6 1.5

RETAILS SALES IN BILLION DOLLARS

2010 600 30 1.1
2011 605 32 1.6
2012 615 33 1.8
2013 625 55 1.9

HOTEL/ MOTEL COLLECTION IN BILLION DOLLARS

2010 0.02
2011 0.03
2012 0.05
2013 0.07

AVERAGE FUEL COST PER GALLON IN DOLLARS IN US

2010 85
2011 80
2012 75
2012 45

Commercial property or land in US is priced in acre or through tenure that is either leasehold or freehold.

The construction cost of a hotel is determined by the valuer once the project is completed.
The franchise officer can provide crucial information regarding the development plans for hotel and how it is planning to expand to new areas.
ADR shows the average rates for every day in the hotel while occupancy rate shows the rate of occupancy in the hotel. Revper will shows the revenue collected per room.

Traffic count

Interstate 40 - 980
Wallow ave.- 570
Jefferson ave.- 640
Interior corridor hotel is more preferred than exterior corridor hotel due to the fact that many people likes hotels with quiet and private environment.
I prefer 5 star hotel since it has all the services that one may requires.
The county government of Putnam can provide the statistics of hotels and the no. of rooms in each hotel.

Dow Jones SP 500

2011 11,674.76 9,674.44
2012 12,359.92 10,659.02
2013 13,435.21 11,389.23
2014 16,469.99 12,457.62
I would not approve this loan as requested since the hotel may not be able to service the loan as required per month. I would request the borrower to lower the borrowed amount or to accept to pay more $12,000 p.m.