Since the President’s State of the Union address, we’ve heard a great deal about making financing available to small business. The truth is, that excellent financing has been readily available all along in our domain. Community Banks (who do not lend to Bezerkistan) have money to lend, and interest rates, usually fixed for 5 years, remain at historic lows.
In addition two programs of the Small Business Administration (SBA) have been beefed up with special terms for businesses like Inns and Bed & Breakfasts. The SBA 7a Loan Guarantee Program will guarantee 95% of a bank’s loan and waive most fees. The SBA 504 Loan Program funds 85 to 90% of an Inn purchase at even lower interest rates, with a significant portion at fixed rates for 20 years.
The banks and the SBA programs are strongly oriented toward the purchase of a going concern and their focus is in the ability of the business to generate cash flow to support the debt service.
Conventional wisdom says that banks are not lending and at some level much larger than the typical Inn business, that is true. But, if the Inn is a viable business, excellent financing is available.