Found A Gas Station For Sale And
Need A Loan? Who Even Does Gas Station Financing? Part I
Banks in general do not like to lend to gas stations and convenience stores. I will repeat.
Banks in general do not like to lend to gas stations and convenience stores.
You could go into great detail as to the reasons for this, but suffice it to say, ANY bank would
rather lend money for an apartment building, office building, self storage facility and a host of other types of
commercial asset classes. The chances of default are less and it is much easier to sell off some of these
properties in case of foreclosure. Gas stations and convenience stores with fuel depreciate much faster than other
types of properties.
So how do you find out WHO is lending? You could go from bank to bank to bank until
you might find one or you could go through a mortgage broker that hopefully knows who has an appetite for lending
to gas stations.
There are a couple of things you can do if you're searching for a bank. If you are considering
SBA financing, you can call the district SBA office for your State and make a Freedom Of Information Act
Request (FOIA) and simply ask any parameter you like. You can ask which lenders have done SBA loans for gas
stations and convenience stores in the past week, the past month, the past year, whatever your time frame is. You
can ask the loan parameters also, meaning, you can find out which loans were done for 7 years, 10 years or 20-25
years. The reason for this is so you can ascertain which ones were real estate loans, which ones were business only
loans or which ones were either working capital or inventory loans. If a loan is for 20-25 years, it WILL be real
estate backed. If you find that a loan is for 10 years, that is most likely a business only loan where the loan and
amortization is ten years maximum. If you see a loan that is for seven years, the borrower probably borrowed money
for working capital or inventory.
You can also find out if it is a 7(a) loan (most common) or a 504 (normally larger loans). You
can find out the loan amount which might indicate to you which banks do larger real estate backed loans. Some banks
lend to gas stations a LOT, but they are small loans, less than $150,000, which are frequently to do a small
construction build-out, add equipment (like an ATM machine, walk in cooler, POS system, etc) but they frequently
are not interested at all in doing larger loans. Some banks specialize in doing these "Express" loans for smaller
If you do make a FOIA request, (visit http://www.sba.gov and find your State's district office) you would want to request the bank name, the
bank address, when they made the loan, what type of loan (7a or 504), loan term, loan amount, and the name of
the business also, the city, State and address. If you live in a larger State, someone that did a
loan three hundred miles away might not lend where you are. This is very true with smaller local banks.
Sometimes you might find that a station is unbranded or independent and a bank has made a loan on that. That
could be a clue that they are more aggressive than others. They will normally make this available to you
after paying anywhere from $25 - $50 for the search and will normally email or mail the results to you in an
ascii format that you can export into Excel or other database formats.
Your other option is to find other stations that have sold recently and approach a title company
to do a title/lien search. This way you can find out who has a mortgage or note on the property and any UCC liens
that might have been filed and when it was done. If a bank or a different investor put a mortgage on a property a
month ago in that area, it is possible they would do another one.
Another obvious option is simply to walk in a gas station or convenience store and ask them who
lent them money because you are buying a station (obviously don't ask someone that would be a competitor).
Your options of banks increase as you try SBA financing, as the US Government backs
approximately 75% of the loan that the bank makes AND frequently the bank sells the note on the market for a
premium AND makes money servicing the loan. It's a win win for the bank and they minimize their risk.
In general, a local bank will be your best deal in a loan, IF they will do the loan, but
unfortunately, most do not. It is probably wise to find out what your local banker even knows about the petroleum
Harold Jaynes is with PetroMAC, one of the premier sources for financing gas stations,
convenience stores and truck stops in the US. Come visit their site at http://petromac.com to learn more about financing and options.
In Part II of this article, we will discuss about using mortgage brokers.
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