Gas Station Loans – Gas Station Financing Is Slower Than Ever But Still Getting Done

You’d think that one would put a more encouraging title for an article, but it’s true. The title could have been: “Gas Station Loans – Are You Ready For Some Torture?” The fact of the matter is, gas stations and convenience stores with fuel have never been, nor will they ever be, the darling of the lending industry. If you could get someone at a bank to tell you what they really thought of them, they’d probably tell you that they can live without them (although they have NO problem receiving millions of dollars of deposits into their commercial accounts).

Let’s pretend for a second that you present a package to a lender (whether you are a borrower or broker) that would make an underwriter lick their chops from how thoroughly you’ve put it together. When they see it’s a gas station, it’s probably going to get put on the bottom of the stack whether it’s conventional or SBA because most bankers would rather work on a medical practice loan, self storage facility, veterinarian clinic, just about  other than a gas station.

Some of the biggest problems that occur over and overSelling a gas station in Florida submitting a gas station loan never seem to change.

First, regardless if it is acquisition financing, refinancing or construction financing, many packages do not have a clear summary about what the borrowers are looking to do. Not only does it not indicate what the borrower wants to do, many times the lender can’t even tell who the borrowers are in the borrowing entity and what per cent they own of the company, if it is a transaction where there are multiple borrowers.

Second, many times there is not a clear usage of proceeds. It’s one thing to put a purchase price and a down payment, it’s another thing to remember inventory, working capital, closing costs, fees, etc. Many times when you are pushing the limits on loan to value (LTV) on a deal, if these other costs are not calculated, the deal probably will not fly. Surprises are for birthdays. Try and minimize your loan surprises, which you inevitably will have.

Third, keep the financials current. Many times people have personal financial statements that are 6 – 12 months old. Many times the year to date profit/loss statements are 3-6 months old. You won’t be getting a commitment letter if you have stale financials and if you do, you will have to update the financials prior to closing as a condition to close.