Growing up, Mike Garner and his family often spent summer vacations in Port Aransas. Mike had such fond childhood memories of beachcombing, surfing, swimming and fishing that he thought of living there someday. Mike continued to vacation in Port Aransas with his wife, Cathy, and together they dreamed of one day owning an island motel. That dream became a reality in February 2002, when Mike and Cathy shocked family and friends by leaving a nice home and good jobs in Lubbock to purchase Belle’s Inn, a quaint seven-room motel located within walking distance to the beach in Port Aransas. They changed the name of the motel to Blue Crab Inn and began making improvements to the property, which includes a single family residence where they reside.

Mike and Cathy bought the motel in a rather whirlwind fashion, financing roughly half the purchase price with a mortgage company and the balance with the sellers. The debt to the sellers was evidenced by two notes, one of which matured in February 2003. Several months before the note matured, Mike and Cathy approached a local bank and attempted to refinance the entire debt, but their request was declined. Somewhat harried, and upset by the inordinate amount of time the bank took before saying no, Mike and Cathy contacted the Small Business Development Center at Del Mar College in March 2003, for help preparing a formal business plan and loan proposal. SBDC business advisor Michael North assisted them, at breakneck speed, in preparing a business plan, cash flow projections, personal financial statement and loan proposal.

Over the next five months, Mike and Cathy approached several lenders, many of whom had concerns with possible homestead issues and compliance with the state’s home equity laws. Making matters worse, they discovered the mortgage company had sold their mortgage to a New York company. The New York mortgage company said they were prohibited from making direct loans in Texas and, moreover, wouldn’t waive the prepayment penalty that expires in March 2007.

North continued working with Mike and Cathy, and made sure that all their efforts to pay off the notes were documented and that they maintained an ongoing dialogue with the sellers. North was hopeful the sellers might agree to renewing and consolidating their two notes and helped Mike and Cathy structure a new loan proposal. Fortunately, the sellers agreed to the terms of the refinancing proposal, and in September 2003, the transaction was closed. The new note matures in September 2007, giving Mike and Cathy ample time to find permanent financing and, more importantly, enabling them to “wait out” the prepayment penalty under the mortgage held by the New York company. According to Mike and Cathy, “The SBDC helped us get all our information together in one plan to present to loan officers, giving a good impression of financial savvy. Our counselor helped us learn how to present our business to others and not feel defeated after being turned down. We gained confidence in our business and ourselves; a great financial advisor for small businesses with creative financing suggestions”.

Blue Crab Inn is located at 718 S. Station Street, and is just minutes away from miles of beautiful beaches and some of the finest fishing found anywhere in the world. Room amenities include kitchenettes, cable TV, air conditioning, microwave ovens and coffee makers. For reservations, call Mike and Cathy Garner at (361) 749-5032, or access their Web site at www.bluecrabinn.com