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Business Editors
REPEATING Tuesday, May 22, Transmission ...
NOTE TO MEDIA: Photo is on Business Wire's Web site at
www.businesswire.com and on AP Photo Archive's TOPIC GALLERY at
archivepix.ap.org
LAS VEGAS--(BUSINESS WIRE)--May 22, 2001
Business Bank of Nevada today announced that it has added as a client one of the most well-known and successful photography firms in the state, Opulence Studios, Inc., with a commercial loan deal totaling $1.7 million.
Through the Bank's special SBA 504 Loan Program, Opulence Studios was able to secure the funds they needed to finally purchase their own office/warehouse building.
The Bank is currently promoting its SBA 504 Loan Program to businesses like Opulence Studios and offering them an interest rate as low as the PRIME lending rate, with as little as 10 percent down. In today's declining rate environment, the prime lending rate is currently at 7 percent. The owners of Opulence Studios, Tom Craig and Gary Zee, quickly realized that they could increase the value of their business and improve their cash flow by investing their rent payment into a long-term asset.
"We've wanted to purchase our own building for some time now and with today's favorable rate environment and Business Bank's pro business climate, the timing was right for us to make that investment," said Craig. "We were also pleasantly surprised at how quick and easy it was to apply and be approved for our loan, especially an SBA loan product. This is a real credit to Business Bank and the highly qualified loan officers they have working with their customers."
Craig added that it seems as if the larger banks have lost interest in dealing with small businesses. "The big banks make you feel like you're imposing on their time, which is very much the opposite in a small bank environment. With Business Bank we felt like, from day one, we were developing a long-term relationship and that we were dealing with people who have the same level of commitment we have to our overall success," Craig said.
Business Bank has been aggressively promoting its SBA 504 Loan program since March of this year. This aggressive posturing is beginning to pay huge dividends for the bank with its loan pipeline reaching some of the highest levels since the bank opened for business in October 1995. As of the end of last week, the bank's loan pipeline stood at approximately $60 million.
"It takes a lot of hard work and effort on the part of every employee to grow your loan pipeline to the level we're at today," said Mark Phillips, executive vice president and chief credit officer. "Unlike some banks, we have the money to lend and are excited to loan it to businesses like Opulence Studios. They are an excellent photography company that epitomizes success and the type of business we want as both a credit and depository customer of the bank."
Phillips added that there are a lot of businesses in Nevada that are just like Opulence Studios in that they would like to purchase their own business facility, but never thought it was possible. "With interest rates as low as they are today, and as little as 10 percent down, businesses may not find a better time to purchase or build their own facility. Market conditions would indicate that interest rates may be bottoming out and could stabilize or even go back up in the near future."
In addition to the improvement in their overall cash flow, Opulence will now realize appreciation of the property, which could add as much as $1.3 million to the value of the property based on a 6 percent return over a ten-year period. The tax benefits, such as depreciation and mortgage interest, also make it more attractive for businesses like Opulence to purchase their own building, according to Phillips.
The SBA 504 Loan program is a collaborative effort between the bank, the SBA and a Certified Development Company (CDC). The bank and the CDC underwrite and process the loan simultaneously, with the bank funding approximately 50 percent of the loan and the SBA, through the CDC, funding 40 percent of the loan, with the other 10 percent coming from the borrower's down payment. The interest rate on the SBA portion of the loan is fixed for the life of the loan, which is 20 years. The bank's portion of the loan is fixed for the first five years and adjusted every five years until maturity.
Business Bank of Nevada, with over $190 million in total assets, is in its sixth year of operation and is one of the fastest-growing independent banks in the state. The bank has four branch offices in Nevada, with three in the Las Vegas area and one in Carson City. Business Bank is FDIC Insured and is a member of the Federal Reserve Bank of San Francisco. Its stock is listed over the counter (OTC) at ticker symbol BBNV. For more information about Business Bank and possible career opportunities, visit the bank's Web site at www.bbnv.com.
Editor's Note: Attached is a rent vs. purchase comparison Business Bank put together for a 5,000 square foot professional office building. The overall savings will vary based on the type and size of the building, the interest rate and other factors that are not included in this example. If you would like a copy of this comparison, please contact Paul Stowell at 702-794-0070 or at pstowell@bbnv.com
Rent vs. Purchase Comparison
Building = 5,000 square foot professional office building
Annual Expense Rent Purchase
Rent or Debt payment (5000x$2.25/s.f = (Debt of $900,000@
$11,250/mo) x12 = blended rate with
20yr am)
=$7,208/mo x12 =
$135,000 $86,490/yr
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Property Taxes $6,300 $6,300
Insurance $11,100 $11,100
Janitorial $3,000 $3,000
Utilities $3,000 $3,000
Common Area Maintenance
fees $3,000 0
Total annual expenses
(estimated) $161,400 $109,890
Taxable deduction for
Depreciation (first year
based on 39 1/2 year
straight line) $0 $25,300
Total improvement to business
cash flow on annual basis $76,810
All expenses are estimated based on average use for professional
office building. Purchase price of building is assumed to be
$1,000,000 with typical SBA 504 loan program financing at 90% Loan to
Value and 10% equity by buyer.
Typical structure for financing under the SBA 504 loan program:
Permanent Lender @ 50% $500,000 Estimated annual debt service based
on 7.0% over 20 years is $46,710.
SBA portion via bridge
loan @ 40% $400,000 Estimated annual debt service based
on 7.8% over 20 years is $39,780
Borrowers equity @ 10% $100,000
Total project cost
(purchase price) $1,000,000
Projected value of the property purchased for $1,000,000 in 2001,
after 10 years, using a 6% annual increase in value would be
$1,689,000.
COPYRIGHT 2001 Business Wire
COPYRIGHT 2001 Gale Group
