Smart Borrowing Provides a Gateway to Helping Timeshares Tackle Large Expenses and Preserve Reserves
Alliance Association Bank has announced an Advisory: Smart and Responsible Borrowing Delivers Flexibility and Opportunity to Lessen the Immediacy of Financial Need to Timeshare Resorts.
CHANDLER, Ariz., June 22, 2021 /PRNewswire-PRWeb/ -- Timeshare resort associations are essential to maintaining the special features that make a resort desirable and functional to its owners. But often times, large and unexpected expenses – from launching a large capital project to replacing a damaged roof or fixing a major pool leak – can leave resort boards of directors weighing the best way to cover costs, while remaining solvent in both the short- and long-term.
Finding Funding
While using cash reserves is one option, many timeshare boards realize that investing cash on hand may not fully cover the anticipated costs of the project or more commonly may severely limit the association's ability to maintain services and amenities while continuing to meet existing financial obligations. Similarly, depending on the size of the project and expense, levying a one-time special assessment may in itself become too burdensome for owners to absorb.
In either case, turning to alternative funding by reaching out to a bank that specializes in association lending can be in the associations – and the owners – best interests by helping bridge the financial gap that exists.
Why Borrowing Makes Sense
Misconceptions sometimes exist among association boards, management and homeowners when it comes to association lending. In reality, smart and responsible borrowing delivers the flexibility and opportunity to distribute the cost of large-scale and long-term projects over time to lessen the immediacy of financial need.
For timeshares, it's also a way to pay for a project, while spreading its cost evenly among owners over the course of a period of time, instead of assessing a one-time charge to owners in that moment.
Determining Whether a Loan Will Work for Your Resort
Following an in-depth assessment of anticipated costs associated with a specific project, a frank discussion between the resort's board of directors and its attorney are vital to determining whether the resort is in a position to take out a loan – and for how much and how long. Specifically, understanding the resort's state of liquidity, or money in their reserves, will establish a benchmark from which to approach a bank with a loan request.
In addition to reviewing the resort's governing documents to determine the resort's capacity to enter into a loan agreement, it is wise to explore options that will be used to repay a loan. This could include an increase to regular assessments or a special assessment paid over a specific period of time. And while not necessary to begin the discussion with a lender, having a clear direction on how to repay the loan is helpful, especially since resort boards and/or owners themselves are vital to approving the loan. It also reinforces to the lender that there is significant community support and commitment to repay the loan.
Beginning the Conversation
Not all lenders are created equal and not all understand the unique nuances of working with timeshares and resorts. Alliance Association Bank specifically caters to the needs of the homeowner association and timeshare industry, providing flexible and creative financing solutions with an expedited underwriting and approval process. Our relationship managers will work with timeshare board of directors to discuss the different types of lending options available, be they term loans or various lines of credit, including construction and disaster recovery, and the benefits each brings to the borrower. Alliance Association Bank offers a wide range of innovative products and services designed to create efficiencies, reduce costs and increase revenue.
Also, a lender's familiarity with the scope of projects an association typically engages in greatly affects their ability to right-size both loans and terms. The Alliance Association Bank Lending team has extensive experience handling loans for deferred maintenance projects, common area improvements, construction defect repair, insurance premium financing and refinancing of existing loans.
For resorts faced with large-scale costs, having a knowledgeable, experienced team on their side is a practical and forward-thinking solution. Alliance Association Bank's team delivers agile funding options that meet both the resorts business goals and commitments to the owners. Contact Stacy Dyer, senior managing director, for more information by calling (843) 637-7181 or emailing [email protected].
About Alliance Association Bank
Alliance Association Bank, a division of Western Alliance Bank, provides financing solutions to the growing timeshare, community management and homeowner association industries with a high level of expertise and responsiveness. This specialized organization offers a wide range of innovative banking products and services designed to create efficiencies, reduce costs and increase revenue. Western Alliance Bank, Member FDIC, is the primary subsidiary of Phoenix-based Western Alliance Bancorporation, one of the country's top-performing banking companies. Western Alliance is again #1 best-performing of the 50 largest public U.S. banks in the new S&P Global Market Intelligence listing for 2020 and ranks high on the Forbes "Best Banks in America" list year after year. Serving clients across the country wherever business happens, Western Alliance Bank operates individually branded, full-service banking divisions and has offices in key markets nationwide. For more information, visit allianceassociationbank.com.
Media Contact
Stacy Dyer, Alliance Association Bank, (843) 637-7181, [email protected]
SOURCE Alliance Association Bank
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