Gas Station Financing?

By Author: John Schnieder
Total Articles: 70
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4/16/09: Redding, CA. Gas station financing during the last year has had its frustrating moments that have been caused in part, by the failures of the banking industry. It seems that greed has shown that it does have the last say to those who want to capture every dollar for themselves at someone else's expense. But we have learned once again that greed, while profitable for a few, has great consequences for the masses. That said, the greedy are setting in the shadows waiting for the economy to allow them to once again ‘rape' the system.

The lesson for the honest borrowers and investors is to deal with reputable lenders and financial brokers. They are out there, but you just need to ask the right questions. One thing to look for when dealing with brokers, or banks, is the amount of up-front money that they want, just to do the loan preparation prior to submission to the lender. The borrower should be aware however, that it does take time to go through the business and personal financials in order to qualify a borrower.

The problem is two-fold:

1) There are lenders that ‘promise' great results ...
... just to be able to get some up-front money with no intention of delivering a loan,

2) there are borrowers who will ‘use' the financing agent as a means of just shopping the interest rates, and have no intention of completing the loan process with that broker. Gas station financing is a complex process that goes beyond a simple loan. There are environmental problems to be dealt with. Gas station lenders must look at many short term and long term factors to make sure that the loan can be profitable long term.

So how should a borrower view the gas station financing process? First, the lending agent should not require up-front money to gather the preliminary loan data that is required to see if the loan can be funded. Once the lending agent has processed the preliminary data, and the loan is viable, then the agent has the right to ask for earnest money from the borrower as good faith that the borrower is serious. The lending agent should at this point develop a non-binding letter of intent, showing the amount of deposit, conditions that will require future deposits if necessary, and conditions for a full refund. The amount of deposit at this point in the transaction should not exceed $1,000.00. In any event, there should be no further deposits expected until there is a letter of intent to loan, from the bank or lender, that stipulates the proposed terms and conditions.

It should be noted, that the loan packaging process, in many cases, is very time consuming for both the borrower and the lending agent. The borrower should feel free to ask the necessary questions about how to obtain gas station loans. Gas station financing requires time to do the job right.

The different types of gas station financing that is available are:

SBA 504 loans that are designed specifically for financing gas stations. These loans generally will finance up to 90% LTV and can amortize over a 25 year period.

USDA loans designed for financing gas stations are for those gas station owners that are in rural areas and town of less than 50,000 population. These loans can be up to 90% LTV and 25 to 30 year amortization.

Conventional gas station financing usually loan up to 75% LTV and can have fixed or variable rate loans and up to 25 year amortization.

Hard money loans are also available but the interest rates are higher and the loan terms are usually two to five years in length, and usually are interest only payments.

Financing gas stations, while paperwork intensive, can be a very enjoyable experience if you are working with the right agent. Take your time and do it right the first time.
Kendall Schnieder is real estate licensed agent that processes gas station loans nationally. He started lending to the commercial borrowers in the mid 90's, and he works only with ‘preferred' SBA banks and conventional lending banks that have gas station lending experience. For more information on how to finance gas stations or other commercial real estate go to http://www.gasstationfinancing.info or http://www.mark4Capital.com