“Refinancing with the SBA 504 program and TMC has given us breathing room,” explains Travis Preece, owner of Gorges Beer Co., which has locations in Portland and Cascade Locks, OR. “While our monthly payment is about the same, we now have cash in-hand to get through seasonal cycles and grow.”
Here’s how Travis used the SBA 504 loan program with TMC Financing to refinance existing debt for the Cascade Locks location and gain additional cash to smooth out cash flow as the busier spring and summer seasons approach.
Building on past experience and success
Before launching Gorges, Travis gained several years of industry experience, including acquiring and growing Ankeny Tap & Table in the Southeast Portland neighborhood that’s now also home to Gorges.
“I’d been working in corporate strategy and B2B sales when I bought that restaurant,” Travis explains about his pivot to the hospitality industry. “That was in 2015 and it went really well, growing from a small local hangout to a blossoming neighborhood spot.”
A business pivot to optimize opportunities
“In 2017, we’d planned for a flagship brewery in Cascade Locks. We acquired land there in 2019 and started construction the next year. But before we got that location fully built-out, we had the opportunity to acquire an existing brewery in Portland, so it made sense to pivot our plan to make the best use that space,” Travis explains about the evolution of Gorges Beer Co.
Despite challenging timing – Gorges opened the Portland brewery on March 6, 2020, just weeks before the pandemic-related shutdowns – Travis and his team were able to grow Gorges into a beloved brewery and brand.
Gorges opened the Cascade Locks location in July 2021, optimizing its Columbia River surroundings – vistas of mountains, forests, the river and, of course, the gorge – with three outdoor spaces and room for weddings, corporate events, and other special gatherings, and welcomes everyday visitors and vacationers, too.
While Gorges kept primary brewing operations at the Portland location, the brewery’s offerings are available in Cascade Locks, along with select ciders, craft cocktails, and a limited menu to satisfy visitors of all ages and tastes.
With operations underway, a refinance is necessary to ease cash flow
Despite a track record of success, Travis ran into a common problem for hospitality-industry businesses when he opened in Cascade Locks: It can be hard to secure financing with beneficial terms, as many lenders view the industry as high-risk. That led Travis to take on high-cost debt.
“We had challenges from Day 1 because of our industry,” Travis admits. “Although other lenders approved us for financing, the amount and terms weren’t what we needed to launch as strongly as I’d have liked.” As a result, Gorges experienced typical problems associated with high-cost debt, including putting reinvestment and growth goals on hold.
How SBA 504 loans help
Travis’s goals for a refinance included obtaining more working capital and lengthening the loan term – and he achieved those and more with an SBA 504 loan through TMC. It’s an outstanding option for small business owners who want to purchase or renovate commercial property and/or major equipment for their businesses or refinance high-cost debt related to these uses because it offers:
- A down payment of only 10% for most projects – significantly less than the 30-40% that’s required for conventional commercial mortgages. For a property like Gorges Cascade Locks, that would mean a down payment of about $300,000 for a $3,000,000+ deal.
- A fixed interest rate for the life of the loan, which can be from $50,000 to $5.5 million for the SBA 504 portion, with no maximum for the first mortgage. TMC has financed projects valued from $500,000 to $44 million. Fixed interest rates also make payments easy to predict and budget over the life of the loan.
- A 25-year term for most SBA 504 projects. This makes payments predictable and more affordable while stabilizing occupancy costs for decades.
SBA 504 loans are made in partnership with a bank, the business owner, and a certified development company (CDC) – in this case, TMC Financing. It was Harvest Bank in Portland that recommended TMC as the financing partner for the Gorges deal and soon, Travis was in touch with TMC SVP and Business Development Officer Anna O’Brien.
TMC’s expertise was critical for successful financing
“The SBA 504 is great way to refinance business debt,” Travis says, “although you have to be prepared for an extensive approval process. We had a few complications but, fortunately, TMC has a large and experienced team with expertise in different areas, and that helped us navigate those challenges successfully. Anna guided me through the process and she and the TMC team were always willing to help – they never said ‘no’ and never passed the buck.”
About the deal, Anna says, “When loans involve commercial real estate and major equipment refinancing, there are a lot of moving parts and it can be hard to predict all of the challenges that can arise. TMC’s experience is the key to getting these deals to the finish line. That’s why we’re here – to help small business owners gain advantageous financing that benefits their businesses for the long term – and why having an experienced team is essential. Seeing Travis achieve his goals and helping Gorges get on a path to stabilization and growth is the best outcome and we’re always thrilled to help.”
“Even with the challenges, it was worth it,” Travis adds. “I received financing to consolidate all the existing debt into one loan with a fixed interest rate and a 25-year amortization. We also had additional cash available to get through slower months and prep for a strong spring and summer. And TMC helped me achieve all that while keeping my monthly payments the same.”
TMC Financing can help your business, too
Travis sums up his SBA 504 refinance experience, saying, “Now, Gorges can survive, build our cash reserves, and grow.”
If your business is located in TMC’s service area of California, Arizona, Nevada, Hawaii, and Oregon, contact us to get started. If your business is located outside of our service area, try the SBA’s Lender Match tool to find a qualified certified development company (CDC) lending partner near you.
About TMC Financing Founded in 1981, TMC Financing is the leading provider of SBA 504 commercial real estate loans in the nation, funding projects worth over $14 billion across Arizona, California, Nevada, Hawaii, and Oregon. Over 7,000 businesses have benefited from this financing, resulting in the creation of an estimated 60,000 jobs.
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