Not All Lenders Are Alike

By Debbie Ely / President, Vacation Club Loans - August 28, 2024

Are all lenders alike? You would initially think YES:

• They lend money at a competitive rate.
• They want my business and will compete for it.
• My product or idea is great, they will love taking me on as a client.

Well, as a longtime customer of Colebrook Financial, it is not that cut and dry so let me explain the process from a customer’s perspective to help you get with the best lender available in my successful experience: Colebrook Financial.

Sure, they are a lender and the business model is to simply lend money; they are happy to talk to you about your business model and needs. Be ready and come prepared with facts and statistics as well as your completed and up-to-date licenses.

As a small brand-new business back in 2016, I personally knew one of the partners, Bill Ryczek for years on a previous timeshare project. I thought “he’ll be grateful I called him first”. Let me say first, Bill is an amazing guy with a wealth of knowledge and experience in our industry. He was more than just a business card but a business friend. Bill listened and asked great questions. Including a few questions I was not expecting or completely prepared to answer since my business idea was brand new to our industry: resale financing. No other company was supporting the resale side of our industry through financing resales, but I knew it should be. Bill was not as confident initially.

Fortunately, after due diligence questions and my research results, the Colebrook Team saw the potential and worked extremely hard to implement my idea into a solid business relationship where they would buy my resale loans as collateral for more operational cash to my company. The legal teams took the longest time in reviewing as we needed to balance the risk vs. the potential portfolio model through appropriate documents for the customers to sign. After several drafts of legal documents, we had a package for our sales team (also lenders since we would be financing) to use. Unfortunately, the package was so large it did not work for resellers or customers. Back to the drawing board we went. During the second round of drafts, mortgage notes and limited power of attorney forms were added. We also analyzed deeper into the markets and brands and found better processes that allowed for simpler (shorter) loan documents.

I spoke to several other lenders as well during this year long process. Colebrook was the only one that had the capacity to be flexible just enough for us to develop our unique program and launch. They have been the biggest key factor in our success due to their ability to review our loans, approve our draws, and get us the operational cash we needed quickly. Their review team is very thorough but expedited our files quickly. Our initial first loan allowed was for $3 MIL; today it is $40 MIL to show you how capable Colebrook is in helping grow a great business.

When speaking with a potential lender, here are some steps to consider:

• Have a business model with solid factual data and realistic projections.
• Show an ability to balance risk with profitable gain outweighing those risks.
• Prove financial stability, either personal where you can personally guarantee the loan(s) OR through strong financial records of an existing business if it already has a history.

Note, your opinion on how successful a “new” project will be is not proof or viable data. Risk and ROI are the biggest factors a lender will look at for consideration and guarantees must be comfortable on both ends. You’ll want a guarantee that if your documents adhere to all the agreement specifications then you can sell the paper (loan) to them AND they need a guarantee you’ll pay the loan back per the same agreement.

Next, attorneys will need to be involved and Colebrook’s attorneys are also paid by the borrower (you). This needs to be in your model as well. Documents must be reviewed and approved by the attorney’s so have these ready and well thought out early on.

State licensing and tax laws should also be included and modeled.

Since timeshares are mostly deeded properties, mortgages are a significant risk deterring item. However, your model should also consider foreclosing costs and processes from the beginning and reflect in your model’s projections.

A Reserve Account will have to be established with your lender. This account will build up over time and will be used to pay off any loans that default. No matter how perfect your project is, loans will default from time to time and the process of foreclosing can be costly if not managed well. This deduction in your cash flow should also be modeled.

If you are requesting a construction loan, one that will cover repairs and upgrades, the HOA will need to show the ability to pay the loan back in full over a reasonable time through HOA dues and/or resort revenue. Please do not wait until your HOA is so in debt that it now suffers from major repair issues or an owner base of unhappy owners to the point that a special assessment will cause major defaults thus adding more financial strain.

Call the team at Colebrook to discuss any of these items as well as exploring your financial needs for your resort or business plan. Good luck!

Doing Something Right

By Tom Petrisko - July 21, 2024

Looking through our client portfolio, it brings me a great deal of satisfaction to see the longevity of our professional relationships. Long term allegiances prove we must be doing something right.

In fact, don’t let us tell you how good we are, listen to what our clients are saying:

For instance, there’s Dennis Ducharme, President / InnSeason Resorts who shared his reasoning behind working with Colebrook. “We are thrilled to have a lending relationship with Colebrook. [They] are extremely knowledgeable about the resort development industry, very flexible and just easy to talk to.”

Another example along these lines is Zealandia. The Zealandia organization was one of the first to convert its unused timeshare inventory to other purposes, and Colebrook was involved from the start. We’ve learned a lot together, and one of the things we’ve learned is that no matter how well one plans - there are always surprises. Our organizations have worked together for more than 20 years and our ability to communicate with each other - plus building in a little cushion - enables us to deal with those surprises.

Butch Patrick (Zealandia’s CEO, President and Co-Founder) said, “our long-term relationship with Colebrook Financial continues to grow…Colebrook is our go-to lender as we offer travel products that reflect the times.”

Bert Blicher, with whom we now partner with at Vacation Club Loans said: “My companies have had a lending relationship with … Colebrook for about 15 years. I plan on continuing that relationship for another 15 years (assuming I am still around).”

A further indication of our reliability is that - while I can’t name names - even other lenders recommend clients to us if loan needs don’t fit their main lender business model and requirements.

I’m proud to be a partner in this organization. As our clients indicate, after you secure the loan with Colebrook, we won’t forget about you. We’ll always answer the phone and from time to time we will reach out to you to see how you are doing and ask what else we can do for you.

Colebrook Employee Faces Grave Danger to Close Loan

By Rachel Belardo - July 2, 2024

Colebrook Financial Company just closed a line of credit with one of its banks despite the strange and possibly dangerous appearance of an unlikely creature in the office of Colebrook member and attorney, Harry Heller. It was early in the morning, and one of Colebrook’s own employees, Rachel Belardo, who is also a paralegal at Heller, Heller & McCoy was dutifully meeting with Colebrook member Linda Heller to execute loan documents. Below is the sequence of events leading up to the closing. Rachel’s eyewitness account is set forth below:

“The morning started as any other, and nothing appeared to be amiss. When alerted that Linda had arrived, I grabbed the file, my notary stamp and seal and a pen and began the journey from my office upstairs to the conference room downstairs. The stairway is narrow and curves in the middle. It was at this curve that I was stopped dead in my tracks, astonished at what I saw before me. It should be noted that it takes a lot to surprise me, as I’ve spent 21 years working in the barn that houses the law offices of Heller, Heller & McCoy and things that may seem out of place or downright insane in other offices are just part of the charm of working in an old building to me.

Resting a couple of steps below me, with part of its body dangling down to the next step and the other part dangling over the side of the stairway itself, was a fairly large snake. I was unable to ascertain its exact size, since I couldn’t see the whole body, but what I saw was enough to know it was no tiny snake and it certainly didn’t belong inside the office. I quickly whipped out my cell phone and captured the below picture. I tried to sneak down the stairs, with episodes of The Crocodile Hunter, featuring the late, great Steve Irwin whirring through my mind. I watched that show faithfully for years, and I was certain I could catch it with little fanfare. The idea was to catch the snake, get a cool picture of me holding it, earn lots of bragging rights and then let it go outdoors, free to roam the woods behind the office.

Unfortunately, a stealthy approach was impossible, since the stairs are quite old and creaky, and the snake quickly became aware of my presence. It turned around and began slithering up the steps towards me. Now that I could see its face, I tried to snap another picture, my phone a mere 5 inches from the snake. Suddenly, it lunged towards me, its mouth wide open, ready to bite. I staggered backwards, the loan documents precariously held in one hand, my phone in the other, the snake’s jaws just barely missing its intended target. It took advantage of my momentary distraction and slithered down the stairs and behind an old table that leans against the wall in the hallway. Still determined to catch it, I quickly ran to the office lobby, set the file down safely and ran back to the hallway to retrieve the interloper. But alas, he was not there, and despite looking diligently, I was unable to find him again.

I gathered myself, attended to the execution of the loan documents and then texted Attorney Heller the picture and advised him to be aware when he came in, as a potentially deadly snake was present in the office. He called me immediately, exclaiming 'A client accidentally brought that snake into our office 26 years ago and we were never able to find it!!!'

Is it the same snake that wandered boldly through the front door of Heller, Heller & McCoy 26 years ago? The world may never know. But the snake was positively identified by both my husband, Chris, who is an avid snake lover, and Attorney Heller, as an Eastern Milk Snake. A harmless, albeit bad-tempered snake, as evidenced by the attempted bite. The life span of an Eastern Milk Snake is 10-20 years in the wild, with some known to live longer than 20 years in captivity. Anything is possible at Heller, Heller & McCoy."

Both a Borrower and Lender Be

By Bill Ryczek - June 9, 2024

Shakespeare’s Prince Hamlet was a confused young man, asking the existential question, “To be or not to be?” Polonius, later killed by Hamlet, approached the matter of existence from the negative, advising his son Laertes, “Neither a borrower nor lender be.” We’re half a millennium removed from Shakespeare’s time and acquired wisdom has taught us that being a borrower or lender is actually a good thing, but even better is to be both borrower and lender.

Colebrook Financial is one of the leading lenders to the timeshare industry and raises the vast majority of its funds by borrowing from and selling participation interests to banks. We understand what our development clients experience because we borrow money, and we can empathize with our bankers because we lend money.

The loan documents we ask our customers to sign are almost identical to the documents we sign when we borrow money. When someone asks us, “Would you sign that document?” we can answer, “Yes, in fact we signed several just like it.” And we know that when a business needs money today, that means now, not when it’s convenient for us to send it. We expect our borrowers to promptly provide us with financial information and we do the same for our bankers. We communicate frequently, just as we want our customers to communicate with us. Having worked in the regulated bank environment, we understand the constraints our bankers face.

In Troilus and Cressida, Shakespeare wrote, “Friend, we understand not one another.” One of the most useful ways to maintain effective relationships is to understand the other party’s situation and needs. That’s a lot easier when you have common ground. Our solution: We didn’t listen to Polonius.