SBA 7(a) Financing

SBA 7(a) Loan Program Highlights For Gas Stations And Convenience Stores

Designed for financing owner-occupied small businesses. All loans will be made with a percentage of the loan guaranteed by the Small Business Administration (SBA).

Types Of Financing:

Acquisition
Construction
Expansion
Refinance
Start-Up

Loan Amounts:

$200,000 – $5,000,000

Terms:

10, 25 Years (Depending on if business only or real estate transaction)

Interest Rate:

Prime + .5% – 2.75% (Varies by credit risk)

Loan To Value: 

50 – 90%

Prepayment Penalties:

1st Year 5%, 2nd Year 3%, 3rd Year 1%

Fees:

None To Minimal Lender Fees
Due Diligence Deposit
Customary Closing Costs
Construction Fee, if applicable, to offset monitoring costs
SBA Charges A Fee Of Approximately 3.5% (depending on loan amount and percentage of guarantee, usually 80%)

Eligibility:

Owner Occupied Small Business
US Citizen Or Permanent Resident Alien Status
Good Credit / Character
Management Experience In Industry Or Related Industry
Reasonable Financial Statement Or Credible Projections
Business Must Meet SBA Size Standards

Collateral:

First land on land, building, equipment and inventory. Additional outside collateral may be necessary if lease-hold improvements are substantial.

Underwriting Timeline:

Loan decision usually within three weeks of receipt of all requested documentation.

The SBA remains the predominant means of financing dealers and operators in the country. The reasons are clear. Because SBA provides longer amortization periods and usually transactions can be approved with smaller debt service coverage, each finance dollar provides approximately 20-25% more in loan amount, making it easier for borrowers to qualify than for conventional financing. It is a misconception that SBA financing takes longer than conventional financing or that you have to be turned down for a conventional loan to be considered for SBA financing. Generall the speed of the approval is in direct proportion to the organization of the loan package that has been submitted. Recently, the SBA has placed more emphasis on the prior experience of the borrower. If you do not have experience in operating gas stations, convenience stores or truck stops, it will be necessary to either bring in a partner with direct management experience, retain the seller (if a purchase) in a management capacity for a period of time / or perhaps attending training courses provided by oil companies. Also important to note is that the borrower’s equity infusion needs to be documented. If you are borrowing money from a third party or are using a home equity loan as part of your equity infusion, the SBA would also consider this as a loan and the transaction would be underwritten to service two separate debts.