Business Bank Launches Low, Fixed-Rate SBA 504 Loan Program.

Business Editors

LAS VEGAS--(BUSINESS WIRE)--March 20, 2001

Today's declining interest rate environment is now making it more affordable then ever before for businesses to own their facility and build up equity rather than throw money away by leasing or renting building space.

Business Bank of Nevada today announced that it is using the declining rate environment as an incentive for businesses to borrow money at an interest rate at or near the prime rate for both the construction or purchase of their own building.

The bank is using its Small Business Administration (SBA) 504 Loan product as the financing vehicle to book and fund these loan requests. In addition to the SBA, the bank is working with Nevada's three Certified Development Companies (CDC) to promote and process these loans. The bank also recently launched an aggressive advertising and marketing campaign to further promote this phenomenal interest rate and loan product that provides Nevada businesses with the opportunity to purchase or build their own business facility.

"With interest rates moving downward, it may make less sense for a business to continue leasing office space or paying rent when they could pay less in a monthly mortgage or loan payment," said Mark Phillips, executive vice president and chief credit officer for Business Bank of Nevada. "On a typical $1 million commercial property, businesses that are renting or leasing office space could reduce their monthly occupancy expense by an average of $3,500 per month by owning their own building. The savings would obviously change based on the size of the project."

Phillips added that running a successful business is all about cash flow, which has two sides to the income statement, the expense side and the income side. If a business can better manage its cash flow by reducing its occupancy expense, Phillips says this will ultimately help the bottom line profitability of the business.

Some of the other benefits of Business Bank's SBA 504 Loan product include a fixed-rate feature and a down payment as low as 10 percent. A number of other commercial loan products require an average down payment of 25 percent and have variable rate options.

"There are a number of other advantages to owning versus renting that a business owner should consider when looking to purchase a building," Phillips said. "Some of the obvious advantages deal with the tax benefits of being able to write off the interest on the loan, depreciation and the property taxes paid on the facility. Perhaps the biggest advantage to owning versus renting is the equity that builds up over the life of the loan, which provides the business owner with another investment vehicle for his or her retirement portfolio," Phillips said.

The SBA 504 Loan program is a collaborative effort between the bank, the SBA and the CDC. Both 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 the remaining 40 percent of the loan. 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 would be adjusted thereafter.

The three Certified Development Companies the bank is working with on its SBA 504 Loan program include New Ventures CDC, Southern Nevada CDC and Nevada State Development Corp., in Las Vegas. Nevada State Development Corp. also has an office in Reno and is the only CDC in northern Nevada.

According to the United States Small Business Administration, the CDC portion of SBA 504 Loans in Nevada for fiscal year Sept. 30, 2000, totaled 71 loans for more than $29.4 million. The SBA anticipates that number to increase this year to more than $36 million, which would represent a 22 percent increase year over year.

Business Bank of Nevada, with more than $185 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. The bank has plans to open additional offices statewide in the near future. 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.