The financing of this hotel had one major twist, the borrower had used half of its 5 million SBA allocation and was only able to use the remaining half for purchasing a hotel. SBA 7a hotel loans provide 75% guarantee to the lender. If the subject loan is larger than the remaining allocation, the lender may at its discretion use lower guarantee for an SBA loan. The downside is that since the lender can only sell the guaranteed portion of the loan in the secondary market, it has to keep a larger than 25% of the loan on the books. This makes sourcing funds for a reduced guaranteed hotel loans very difficult as this is a very unpopular unprofitable proposition to a lender in our current market. Generally borrowers are simply guided by lenders or brokers towards a hotel SBA 504 program which is far more process intensive than the SBA 7a program. Scientific Capital was able to make a different arrangement to allow the borrowers to obtain an SBA(7a) which is far simpler to process and has short prepayment penalty.