Long-term commercial loans: helping businesses capitalize on new opportunities.

AuthorBarbour, Tracy
PositionFINANCIAL SEVICES - Company overview

Last year when Premier Alaska Tours anted to expand, it turned to Wells Fargo Bank for help. 2he Anchorage-based tour company needed funds to purchase Royal Celebrity Tours' Alaska assets: four deluxe dome rail cars, a rail maintenance facility with a commercial prep kitchen for the onboard food service, 52 motor coaches and 17 support vehicles. The financing, which exceeded $10 million, encompassed six different loans with terms ranging from four to 20 years.

"It was a complicated loan package involving a great team (Joe Everhart, Sam Mazzeo and Christie Watson) that found us the best solution for our specific financing needs," says Chief Executive Officer Peter Grunwaldt.

Wells Fargo's financing enabled Premier Alaska Tours to purchase the equipment necessary to grow its business and the infrastructure to maintain it. And perhaps more importantly, it provided structure and flexibility that was critical for the seasonal nature of the company's tour operations. Established in 1995 with a staff of three, the tour company has a year-round staff of 42 and approximately 350 seasonal employees. Grunwaldt says: "As our banking and financing needs have grown, Wells Fargo has had the resources to not only meet our needs, but exceed our expectations."

Where to Secure Financing

Premier Alaska Tours is among the in creasing number of Alaska businesses taking advantage of long-term commercial loans from banks, credit unions and other financial institutions. A long-term commercial loan is funding that's greater than 12 months, according to Generally Accepted Accounting Principles; but what constitutes a long-term commercial loan at Alaska's financial institutions varies by term, purpose and the assets involved.

First National Bank of Alaska, for instance, classifies longer-term business loans into two categories. It offers commercial and industrial purpose loans with terms of three, five and seven years and commercial real estate loans financed for up to 15 years. Alaska's largest locally-owned bank, First National Bank serves the financial needs of Alaskans with ATMs and 30 branches in 18 communities throughout the state.

At KeyBank, long-term debt usually involves loan terms of five years or greater. Regardless of the length involved, long-term business financing generally represents secured debt that carries a fixed maturity and interest rate. It requires monthly or quarterly repayment based on various amortization schedules, and the loan amount is...

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