Financing gas stations, convenience stores and truck stops can be financially very rewarding. Many people in commercial financing avoid this asset class altogether because of the perceived inherent difficulties that it poses, namely being a cash business and the perception exists of significant environmental risks. As a result of it being more difficult to finance as opposed to multifamily, office buildings, warehouses and other types of commercial properties, the need for knowledge and professionalism is even more important.
First of all, who is PetroMAC? PetroMAC has corresponding relationships on a conventional basis and brokers SBA transactions. Brokers and borrowers can not approach many of our conventional sources directly or do now know of them. Borrowers will normally not see a commission fee agreement from PetroMAC, as normally would be present in a loan originated by a broker. We function as a retail outlet for some well known banks, lenders and hedge funds. On an SBA basis, we frequently get deals approved that others have not because of our understanding of the industry and our ability to uncover cash flow. Your borrower will not pay more for your loan by dealing with PetroMAC. We do not operate in opulent offices or operate out of a central location. 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. We try to stay ahead of the curve on a technological basis so that we can disseminate information from transactions almost instantly to loan officers, processors and underwriters.
How will I be paid on a transaction? Most conventional lenders do not pay a referral fee for a gas station or convenience store loan. It might be standard to have a referral fee or yield spread on multifamily, office buildings or all sorts of other commercial properties, but this is not the case with C & G (convenience and gas). We do not have yield spread on either SBA or conventional (conventional being defined as any loan that is not government backed such as SBA 7(a), 504 or Rural Development B&I loans. It is important that you have a fee agreement with your borrower. Because there really are not usury laws for commercial loans, many brokers charge in our opinion inappropriate fees. Many underwriters will immediately kill a deal if they deem fees to be excessive. We usually can collect a point at the table on our stated and interim/bridge loan program. If you are charging more than a point, you will need to collect that outside closing. Exceptions to this are high LTV loans (95 – 100%) where the borrower has little to no equity to put into the deal. The logic is, if a borrower has no money to purchase a station, they have no money to pay a broker. In these cases, borrowers would need to pay the broker outside of closing or with a side agreement. On SBA loans, we usually can pay the broker a 1% referral fee. Of most important is communication on each transaction so there is no ambiguity or unrealistic expectations. We want you to be successful in the transaction, because your success dictates our success.
Does PetroMAC have to deal with my borrower? The answer to this is an emphatic YES. There is a HIGH ratio of failure with loans where we do not speak to the borrower. As a matter of fact, we will always speak with the borrower. If the broker will not allow ut to deal with the borrower directly, we will not be interested in the transaction. If it makes you more comfortable to speak with us on a conference call with your borrower, that is quite accceptable. We have the ability to sell the deal better and we usually can get answers quicker and undiluted. We have no control as to what a broker tells a borrower and in many cases, misrepresentations have been made just so the broker could get the deal from the borrower.
I don’t know ANYTHING about lending to gas stations and convenience stores. Can you help me? To quote Vidal Sassoon, “If you don’t look good, WE don’t look good.” Your professionalism (or lack thereof) will reflect back to us. In an effort to help you understand the C & G industry AND commercial financing for this asset class, we have created written and audio training information at pages.asp?cmd=training .
How long does it take to get a deal approved? Many times brokers tell us they have a “complete package.” We have found that that is accurate maybe one in twenty times. 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. It is also important that you convey this to the borrower and to keep expectations realistic. Transactions where borrowers own multiple companies will obviously take somewhat longer.
How can we speed up the approval process? By keeping all documentation in an organized, sequential and labeled fashion, it will help us by reducing the time we have to spend organizing the file. Particularly, if you can indicate the structure of what tax return belongs to seller or buyer will help facilitate this process.
What do I need to do to pre-qualify my borrower to see if it’s a deal PetroMAC would like to consider?In order to pre-qualify loans faster, we have found that providing a certain amount of information up front helps us expedite the underwriting of a loan. If you can provide us with the following information, it would help us a great deal. You can click the blue underlined links and find the form on the PetroMAC web site.
Please refer to the FREQUENTLY ASKED QUESTIONS for additional questions on financing and about PetroMAC.
After we have pre-qualified a transaction, this is the document checklist that we go by usually when doing purchase financing. Exceptions to this checklist is when the seller is an oil company or fuel supplier where full financials will not be available or also closed or auction sites. Please inquire if this situation applies. All forms are available here on the PetroMAC website. This information should be faxed to (202) 478-1811 or emailed to info@petromac.com.