PetroMAC's Frequently Asked Questions for
petroleum marketers, C-stores and franchisee
Q: How do you determine if you do a loan
SBA, conventional or on some other basis?
A: That decision is
usually based on the cash flow of the business, since it is easier to qualify for SBA financing
with less cash flow than with conventional financing. If a loan needs to close quickly because
a borrower is about to lose a deposit or a site has been purchased at auction and needs a quick
closing, we will frequently use bridge or short term financing programs.
Q: What are the
rates: A: Our rates will be very competitive and
are based on Prime, Treasuries, LIBOR and on the contract structure and credit
Q. What is your turnaround
A: Our target is to have loans approved and
closed within 45 -60 days. On the short term/bridge and stated income programs, it
usually takes a week to obtain a commitment letter. On SBA and conventional loans,
normally around fourteen business days, but
this is only after receipt of all requested information.The clock does not start simply because we have issued a Letter Of
Interest. Again, commitment letters will not come
prior to receiving all requested information.
Q: Do you require Phase 1 or Phase 2
A: If Phase 1 Site Assessments and Phase II
Subsurface Investigations have been previously prepared, they are reviewed by the
lender's environmental staff. A Phase I or Phase II is usually valid for six months
according to industry standards. If the report is older than six months, it is usually
required that the company update the report.
Q: Will PetroMAC do financing for properties
with known environmental problems?
A: Yes, assuming all information required by
the lender's environmental staff is provided and all standards are met. Most
environmental "issues" are not issues per se. Refusing to consider properties with
supposed "issues" usually represent a lender's reluctance to lend to the industry in
general because other asset classes such as multifamily, office buildings, storage
facilities pose less risk to the lender.
Q: How much does an environmental report
A: A Phase I environmental report normally
costs approximately $2,000. It normally takes 1-2 weeks to have a Phase I environmental
completed. The cost of a Phase II depends on the recommendations an environmental company
Q: The site I am purchasing has been
remediated and is currently being monitored, but I do not have a "No Further Action"
letter. Can I obtain financing?
A: Depending on if an
indemnification agreement is available and who the indemnification agreement is from (i.e. from
oil company, jobber or dealer) will dictate what type of financing that is
Q: The station I am looking to buy has old
steel tanks. Can we obtain financing?
A: Yes, however, the site
most likely will need to have the tanks replaced with fiberglass tanks in the upcoming years
due to new EPA regulations that will take place in 2009.
Q: Does PetroMAC only do financing for gas
stations and convenience stores?
A: No, we do financing convenience stores,
service stations, truck stops, car washes, oil and lube centers, and related concepts.
The list is always expanding, and we are open to exploring new
Q: What if we do not have enough money for
our down payment. Do we have any options?
A: Yes, frequently we arrange for petroleum
suppliers (jobbers) to provide equity infusions. This will necessitate a long term fuel
agreement (usually ten years) and possible re-branding/re-imaging. Jobbers normally do
this arrangement for locations that pump at least 750,000 gallons per year at a minimum.
PetroMAC also has at its disposal Joint Venture parterships for "A"
Q: The station I am purchasing is an
independent. Can I obtain financing?
A: Yes, but we typically would make sure
the individual has significant experience. It would also depend on if the borrower had a long
term fuel supply agreement or if the borrower were purchasing spot.
Q: What is the most difficult loan to
A: A business only acquisition is typically
the most difficult loan to close because of the lack of available collateral. Individuals
without significant management experience and capital typically will have a difficult
time obtaining financing from lenders.
Q. What are the main reasons loans are
A: Lending activities
tend to go in cycles and certain asset classes fall in and out of favor with lenders
frequently. The main reason loans are declined in with C & G (convenience and gas) loans is
because lack of verifiable cash flow. Most of our activities are in acquisition financing and
frequently sellers have not declared all of their income which makes verifying all of their
revenue problematic. Frequently we run out of time because the borrowers have gone to other
lenders prior to PetroMAC leaving a short time frame to close their loan. Many borrowers have
very poor documentation to present which takes loan officers and processors an inordinate
amount of time to present a loan in the best possible light to an underwriter. In the past few
years, many more loans have been declined due to the borrower lacking direct industry
experience and borrowing funds for their equity infusions. A percentage of loans are also
declined due to environmental issues.
Q: Who does PetroMAC use for
A: Even though we do not
order the appraisals, we normally will only recommend to banks companies that specialize in the
C & G industry. These companies have significant experience appraising gas stations,
convenience stores and truck stops. However, many banks have to put appraisals out for
bid. Some properties do not cash flow what the actual real estate value of the property
is worth, and some cash flow significantly more than what the actual asset is worth, so we use
companies that can distinguish value based on cash flow.
Q: How much does an appraisal cost for a gas
station or convenience store?
A: It normally costs
$2,500 - $3,000 for an appraisal on a gas station or convenience store. Appraisals for large
truck stops and travel centers cost more.
Q: How long does it take to do an
appraisal on a gas station or convenience store?
A: It normally takes
three to four weeks for an appraisal. Borrowers can pay an additional fee to have an appraisal
done on an expedited basis.
Q: I'm a New American and I still do not
have permanent resident alien status. Can I obtain
A: Yes, but you would not
be eligible for SBA financing and most conventional programs. You would be eligible for
financing under the bridge loan program, which can extend a loan for up to five
Q: Does PetroMAC operate from a centralized
A: No. Our processors
operate from a centralized location but loan officers and underwriters operate all over the
country from the comfort of their own home, much as Account Executives and Business Development
Officers do for SBA lenders and many banks.
Q: Is PetroMAC aware of sites that are for
A: Yes. Many oil
companies send us their surplus lists as well as many banks send their REO (Real Estate Owned)
lists of distressed properties they are trying to dispose of.
Q: Do you do construction financing?
Q: Can PetroMAC assist me
in other areas of my business?
A: Yes. Part of the
services we offer is to assist the operator or dealer in negotiating fuel supply agreements,
vendor agreements and consulting services.
Q: Is PetroMAC a direct
A: No. PetroMAC has
corresponding relationships on a conventional basis and brokers SBA transactions.
If we originate the loan as an SBA loan, most lenders will pay PetroMAC a referral
fee. If we originate the loan on a conventional basis, PetroMAC will charge the borrower
a fee, usually not greater than 1% and on larger loans, frequently