Financing hotels under the SBA 504 is fairly standard. If a loan is over 5 million and higher Loan to Value is desired by the borrower in a market where conventional financing at similar LTV is not available, SBA 504 is the program of choice. The question is which lender to use and what terms to seek for the clients. At Scientific Capital, we actually do the work an intermediary is supposed to do, we define a set of loan term requirements based on the clients’ business plan. We then inquire from a number of lenders, regional and national, to find an offering that is the best possible match to the clients’ requirements. In this instance, we chose a program that offers 10-year fixed rate of 5.2%, 25 year amortization, no prepayment penalty, and reduced fee. We also obtained a line of credit of half million dollars for the completion of the Property Improvement Plan (PIP) required by La Quinta. SBA 504 loans have stiff prepayment penalties. Generally the prepayment on the first loan is declining 5 (5% year one, 4% year 2, …. 1% year 5 and no prepay after) coupled with the SBA portion that has a declining 10%. The zero prepay and the 10-year fixed rate of the bank loan were the most important features of this loan matching our client’s business plan for this investment.