While the SBA 7(a) loan program is a very useful financing vehicle for the projection based or the challenging transactions, if the PRIME index on which the SBA 7(a) loans are pegged is high, the hoteliers often refinance after the 3-year prepayment term. In this case, the SBA 7(a) loan allowed financing the purchase and over $1 million of PIP on projection basis. However, once the PIP completed and the hotel’s revenue stabilized, the refinance of the $4.4 million SBA 7(a) loan at 9.25% to a conventional loan at 7% and 25 year amortization reduces the debt service by $85K per year or $424K in 5 years enjoyed by the borrowers as additional profit.