C-Corp lending options for STR properties

[Scott Tucker]

My wife and I created a C-corp using a ROBS 401(k) to start a vacation rental business. As part of our initial due diligence we took a deep dive into Lahaina, HI. After running the numbers, we decided to start out by focusing on the GATLINBURG/Pigeon Forge, TN and Killington, VT markets as they have a lower cost to enter which ultimately results in higher net revenue.

My question is does anyone have experience obtaining financing for a ROBS C-corp to purchase property? In order to not run afoul of the IRS rules, the loan has to be in the C-corp’s name but I can be a personal guarantor for the loan. From the lenders I have spoken with in Tennessee and Vermont, the fact that the C-corp has to be named on the loan takes me out of conventional financing and puts me into commercial or portfolio loans. Which increases the down payment requirements from 10%t o20-25% and doubles the interest rate. When I was looking in Hawaii, I did find a lender who had an in-house product that would allow the C-corp to be on the loan on terms similar to a conventional loan (10% down and 3.8% interest rate), but I have been unable to recreate such an option elsewhere. Any advice is greatly appreciated.