Nationally Flagged Hotel - Lake Charles, Louisiana

This 55-room Nationally Flagged Interior Corridor Hotel located on Interstate 10 in Lake Charles, Louisiana serves the busy I-10 travelers for business and pleasure. Whether their guests are workers headed to meetings at area business or vacationers enjoying the scenic beauty of southwest Louisiana and visiting the area casinos, this Lake Charles Hotel serves them all.

Purchased in the spring of 2006 by experienced hoteliers with other properties in Texas, Oklahoma and Colorado, the purchase and renovation to update the five-year old property required a loan of $3.2 million.

Regional Loan Corporation (RLC) was part of the financing package that helped the new owners complete their renovation and obtain their re-licensing of the brand. RLC supported 35% of the loans obtained by the owners to help them achieve their goal of providing comfortable, affordable accommodations to travelers.

RLC’s SBA 504 loan carried a debenture rate of 5.82%, and an effective rate of 7.449%, both fixed for 20 years!

The RLC is designed to assist small businesses unable to obtain full conventional financing through private financial institutions.

Family Style Dining Restaurant - Houma, Louisiana

Taking its place along side the wonderful Cajun cooking of Houma, Louisiana, this family-style restaurant needed funds to start its business. This restaurant is known for its ‘all-you-can-eat’ Buffet and offers the biggest and best buffet and grill available anywhere.

The owners of this Houma restaurant venture used an SBA 504 loan of $639,000, provided by the Regional Loan Corporation, as part of their financing package to build, purchase equipment, furniture and fixtures in opening the restaurant. This loan carried a debenture rate of 4.76% and an effective rate of 6.697%, both fixed for 20 years!

The RLC is designed to assist small businesses unable to obtain full conventional financing through private financial institutions

Think OFFENSE!
When was the last time you talked about a 20- year fixed rate with one of your customers?

Historically, we all know the 504 product has been used as a credit enhancement. If the credit department was nervous about a deal, then you would make them feel better with the 50% LTV that the 504 product offers.

However, the 504 program has been under-used as part of pricing strategy. As bankers, we all wish we did not have several competitors on every deal. The reality is that it is the norm and not the exception.

In survey after survey, businesses have said that they are looking for something value-added in their banking relationship. They don’t want to hear about the same old products. They want to know “How can you save me money or make me money”? The 504 product has lots of value-added elements, such as:

Low-equity requirement. There is nothing more precious to any business than working capital. They never have enough. With only a 10% equity requirement for existing businesses, the 504 offers capital preservation. In addition, most fees (closings costs, appraisal fees, environmental fees and points) can be financed.

20-Year Fixed Rate. The interest rate on our 40% of the debt loan is fixed for up to twenty years. When was the last time you talked about a 20-year fixed rate with one of your customers?

Current Rate. The current note rate on 504’s is 5.4%. Adding in the servicing fees, the effective rate is 6.9%.

TO RECAP: Only a 10% equity requirement. Fixed rate for twenty years at 6.9%.

Do you think that would add value to a current relationship or get you in the door to a new client?