At a glance
- WOMPA, an innovative mixed-use property, faced complex financing challenges due to its unique business model.
- Grow America’s creative, second-position loan structure allowed WOMPA’s primary bank to maintain the customer relationship while reducing risk and exposure.
- The joint financing solution provided long-term stability by recasting high-cost debt into a 25-year fixed rate loan.
When Dean Williams and his partner Michael Mason envisioned WOMPA, they saw beyond the typical mixed-use development playbook. Located in Tulsa, Oklahoma, their 85,000-square-foot property sprawls across four and a half acres, combining everything from office space and warehousing to an RV park and event venues. But turning this vision into reality required more than just imagination–it needed a lending partner willing to think equally outside the box.
WOMPA’s opportunity
The property started as a highly distressed industrial space, but Dean and Michael saw its potential. Driven by their passion for creating a unique community hub, they took the initial leap using personal funds and high-cost bridge financing to begin the transformation.
This misalignment of short-term financing with long-term assets created mounting pressure. As the bridge loan’s balloon payment loomed, the partners were under pressure to secure more sustainable financing. While the property was beginning to generate cash flow and attract diverse tenants—from art festivals to theater groups–traditional lenders were hesitant.
Roadblocks to conventional financing
WOMPA faced several challenges in securing traditional financing. An unconventional business model combined multiple real estate uses and while the owners had cash flow from other endeavors, WOMPA itself had limited historical cash flow. Moreover, the short-term rental space faced industry headwinds as bigger players, like WeWork, recently experienced financial challenges.
However, where traditional lenders saw red flags, Grow America saw opportunity. The property’s unique combination of membership agreements and event bookings, coupled with the underlying real estate value, presented an interesting proposition for a lender willing and able to look deeper.
The Grow America solution
The solution emerged during a collaborative call between Grow America, Dean, and Dean’s banks, Security Bank and Rivercrest Bank. By structuring the deal similar to an SBA 504 loan but using the SBA 7(a) program instead, the team created an elegant solution. Dean’s bank maintained first position while reducing its exposure by recasting the loan terms. Grow America took a second position with a $5 million SBA 7(a) loan featuring a 25-year fixed rate.
Results and impact
The immediate impact was transformative and provided benefits for all parties:
- The bank maintained its relationship with WOMPA while reducing its risk
- WOMPA secured long-term, stable financing
- The property’s cash flow improved when Dean’s monthly loan payments were significantly reduced.
“This extra cash is allowing the business to stay on an investment track,” Dean notes. “We’re not yet done with the buildout, so we can keep investing in the business.” The financial flexibility has also enabled WOMPA to remain responsive to community needs, allowing for continued evolution of the space based on member requests.
How partnerships unlock opportunity
WOMPA’s case demonstrates how creative financing solutions can unlock value in complex projects that otherwise struggle to secure traditional funding. By looking beyond conventional metrics and working collaboratively with existing lenders, Grow America found a way to support an innovative community development project while maintaining prudent risk management.
If you work with small businesses facing similarly complex scenarios and seek a lending partner who can take a creative approach to getting deals done, use the form below to contact the team at Grow America to discuss partnership opportunities today.