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WHY HOTELS BARTER WITH EOA

Unlike banks, EOA does not have a huge cost of funding as it pays no interest to depositors. Consequently, it's able to provide qualified clients unsecured, low interest loans and lines-of-credit. Savvy businesses are constantly using EOA financing to purchase what they want when they want. As we continue to bring our clients new customers to repay their purchases (without touching their existing cash flow) so that they can continue purchasing!

PAY  FOR  YOUR

FINANCING WITH EMPTY ROOM NIGHTS

EOA Financing is great for

Alaska's HOSPITALITY INDUSTRY

Even though interest rates are the lowest they’ve been for many years, financing is very difficult to acquire, and even for those with excellent credit, as banks are very picky who they lend to, as their interest income is so low. However, for the hundreds of Alaskan business that are part of the EOA network, this credit crunch has not been such a hard ship. As EOA has been making low interest barter loans (3% simple interest) and providing Alaskan businesses easy financing for more than 24 years!

 

EXAMPLE: An Alaskan hotel needed a $100,000 renovation. They approached EOA’s Anchorage Alaska office looking for a barter loan to offset their cash costs. We sat down with them and identified $50,000 in possible barter purchases that was available in Alaska through EOA that they needed for their project. We quickly gave them a $50,000 unsecured barter, low interest line-of-credit, which they subsequently repaid in less than a year – by accepting the barter as payment for their otherwise empty room-nights that would have otherwise not have been rented.

 

Alaskan EOA cardholders either use their free Android or iPhone mobile apps or EOA membership website to find the barter product or service that they want. EOA cardholders are compelled to bypass their competition, and purchase what they need through barter – because of the way they get to pay (trading which gives them a sale each time they buy.)

 

Their barter loan created massive benefits for the hotel, over their conventional bank financing. Their Bad loan was easily repaid with $50,000 worth of new barter sales, which was also brought to them by their lender, EOA!

 

EOA loans also:

 

  • Brought the hotel new barter sales – from EOA’s huge worldwide customer base.
  • EOA means less competition – because almost all of their competition does not accept the EOA card.
  • Saved the hotel a lot of money – as they repaid their entire barter loan only with additional sales from their otherwise unsold room-nights. Business they would not of had otherwise.
  • Loan repayment did not touch the hotels cash flow – as they did not repay their barter loan with cash earned from their existing customers, but trade dollars earned from new barter customers.
  • Loan debt did not show up on their credit score, that they’d added to their current debt load, however
  • Hotel’s loan repayment will be added later (after it has been completely paid off) to improve the hotels credit score – if hotel owner wants this.
  • And just like any bank loan, all their barter financing expenses were also tax deductible, with some very powerful added tax benefits.
  • Since the incremental cost of renting an otherwise empty room for the typical hotel is around 15 percent of rooms selling price, bartering hotel’s actual out-of-pocket cost of paying their loan back was only $7,500 for their $50,000 barter loan!

 

This thinking also follows the cost structure set by the IRS, who only allows a hotel to deduct the actual incremental “specific out-of-pocket costs” of a donated room-night. CPA’s agree that the IRS is correct in not figuring in the bartering hotel’s usual overhead costs that remain unchanged, and would be there regardless if they rented that room out or not. The actual costs of making incremental sales do not include a business’ overhead costs; and remember, all EOA barter sales are incremental.

 

When all was said and done, their EOA barter loan was far nicer to their company then their matching $50,000 cash loan (that took weeks of paperwork) they received from their long-time local banker – which their banker only gave them after the hotel could show that they already had half (50%) of the renovation costs covered from a barter loan through Alaska’s EOA office.

 

Last we heard they are still making monthly cash payments on their bank loan, that each month takes away from their cash flow and does not produce any new customers for their hotel.

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