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Once called the “grand old painted lady” for its pink exterior, the historic 1895 mansion at 68 Front St. in Healdsburg has been transformed into an elegant bed and breakfast destination that opened April 9 as the River Belle Inn.

The project was financed with a U.S. Small Business Administration loan through Santa Rosa-based Exchange Bank.

“We stopped in Healdsburg while driving to the coast and saw this property overlooking the Russian River with views of Fitch Mountain and Mount St. Helena,” said Thomas Bangs, architect, builder and developer specializing in the design and construction of large custom homes. “We loved the site, but at first couldn’t decide whether to tear the house down or save it.”

After inspecting the two-story structure, with its wrap-around porch, colonnade and mature palm trees, Bangs and wife, Mitzi, decided to restore what had been home to Isabelle Simi Haigh from 1895 until she died in 1981. She was the daughter of winemaker Giuseppe Simi, founder of the original Simi Winery located across the street.

During the renovation, the home was raised 7 feet to add a foundation. The building was expanded to accommodate 11 guest rooms.

Artwork lines the bed and breakfast’s wide halls. There are window seats and a library alcove near a paneled elevator as well as hardwood floors. The main-level registration area is adjacent to a drive-through portico, wine parlor, dining area, sitting room and kitchen. The third level is a residence for the Bangses.

Exchange Bank SBA loan officer Maryanne Harris said the project would not have been possible without the SBA providing part of the financing.

“We worked closely with the Bangses to apply for a $2.617 million material refinance and renovation SBA 7(a) loan,” Harris said. “This type of financing is designed to be similar to conventional bank loan with some significant advantages that make a material difference — while saving the borrower from having to provide a large equity contribution.”

The SBA 7(a) program allows for minimal down payments — equity injections — minimal prepayment penalties and extended maturities with no balloon payment, all of which are not available via traditional bank financing. An SBA loan focuses on cash flow, not collateral, and promotes making loans with little to no collateral, should none be available.

The Bangses were only required to provide a 12 percent down payment, versus the standard conventional equity injection of from 25 percent to 30 percent for special-use properties.

As an SBA-approved lender, Exchange Bank provided all the funding for the River Belle Inn project, and the SBA issued a 75 percent guaranty should the loan default, as an inducement for the bank to take on additional risk.

“Conventional loan teams would have involved a 20-year amortization with a 10-year maturity,” Harris said. “However, the SBA structure enabled a 25-year loan that is fully amortized — more like a home loan than a commercial one.”

The SBA prepayment penalty for the inn’s owners was for a three year-period — 5 percent, 3 percent and 1 percent each year, respectively — versus a 5 percent prepayment penalty each year for five years with a conventional loan.

“While SBA loans have compliance and paperwork hurdles, they are well worth the effort, given the benefits and flexibility SBA borrowers can receive,” Harris said.