Truck Stop Financing - You're In
Truck stops have always been difficult to finance. Gas stations and convenience stores have
never been embraced by the banking community but truck stops are even more problematic. Truck stops, like gas
stations and convenience stores, are not desirable to many lenders because of its single use nature. They
also depreciate faster than most types of commercial properties in case of foreclosure and are much more
difficult to sell than a gas station or convenience store due to the lack of qualified operators that can
borrow money. Many of the larger transactions have not and do not have access to government backed financing
(SBA and Rural Development) because the size of the loan is too large or the net worth of the borrowing
entity is also too large.
In 2008, the SBA enacted measures that made it virtually impossible for truck stop financing. It was required
for ALL purchases for a seller to provide an environmental indemnification agreement (regardless if there had ever
been an environmental issue). It was also required that a Phase II environmental be done on all sites over five
years. The SBA also required a separate business valuation be done in addition to an appraisal. Most sellers (and
rightfully so) refused to sign indemnification agreements, which only made sense if they owned a property that had
an environmental issue.
Because of severe economic downturns in the economy at the end of 2008 and beginning of
2009, petroleum lending ground to a virtual halt. Lenders were more concerned about preserving capital than lending
capital. In addition, the secondary market was non-existent for SBA. Prime was at an all time low and companies
that traditionally paid for these loans could not make a profit on them because of the low rates. Most lenders
count on a secondary market to sell loans to and only to have to service the loans. Only the much larger banks
could do these loans and keep them in their own portfolio.
The credit market is definitely thawing again.
The SBA on March 1 reversed some earlier enacted policies that made doing truck stop financing prohibitive. The SBA
no longer will require an indemnification agreement from sellers (unless there is a current environmental issue).
The SBA also will no longer require Phase II environmentals to be done on a property unless there is an open file
on the site where an environmental issue has either been identified, or the site is currently in remediation or is
The SBA guarantee fee has also been waived approximately until the end of 2009. This will make
it an even more attractive option as it was one of the main reasons people did not choose SBA financing.
Obama administration is freeing funds to make the secondary market viable again. SBA lending has increased
significantly the second quarter of 2009. While SBA financing is not an option for the larger truck stop / travel
plaza loans, it will be appropriate in the $5,000,000 and under loans in many instances.
SBA 504 loan guidelines are also changing in the second quarter of 2009. For the first time, borrowers will be
able to refinance their loan with an SBA 504 loan. While the policies and guidelines have not been finalized, this
will certainly be an option for some borrowers for truck stop financing.
Regardless of which type of financing a borrower may pursue, make sure that they deal
with entities that have a fundamental knowledge of the petroleum industry, specifically truck stops and
travel plazas and have a long track record in commercial lending.
Contract Harold Jaynes with PetroMAC today if you need a truck stop financing. We can also assist you in
negotiating your purchase agreement, your fuel supply agreement with a jobber or with an oil company and we can
assist in negotiating your agreements with all your vendors. We also can assist you with your business plan. Visit
our site at http://petromac.com
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