Posts Tagged: ‘SBA’

Financing Gas Stations and Convenience Stores 101

March 26, 2015 Posted by admin

How gas station owners can finance or re-finance gas station real estate. Most banks don’t want to lend on this type of property because they do not understand this business. Kendall Schnieder has been in the commercial real estate finance business since the mid 90’s and has a very close working relationship with some very aggressive banks.
Monday June 11, 2009

The USDA B&I lending program might be just right for you the time you need gas station financing.
Is your request for gas station financing the “Cream of the Crop?” Do you have a FICO score of 800+, 50% down, and 25 years of management experience? If not, then the next time you want to apply for gas station financing, you need to look beyond in-house lenders such a banks or savings and loan type lenders.
There are many financial instruments that are used for funding gas stations and convenience stores, the problem is find a lender that first of all knows the gas station financing business, and second, is in a position to shop various lending resources for the best funding program. Most lenders are employees that work for a bank or lender, and they normally have a set of underwriting guidelines that do not fit all circumstances. So they go by the numbers and know that if there are fifty applications for gas station financing, that one or two will be funded. And that is all they want, because those two applications will be the cream of the crop, and usually very safe loans. But what happens to the other 48 applications? That is what we want to talk about in this article.
Many gas stations are located in rural areas, meaning that they are not located close to a metropolitan city, and are located in town with fewer than 50,000 population. Gas station financing in these areas becomes more difficult for many reasons, none of which are directly tied to the business, but to underwriting guidelines. It is also important to understand that financing for gas stations is improving, and funds are becoming more available. One point that I want to make here is that this ‘loosening’ of funds for financing gas stations specifically, is not going to be long term. Part of the world plan on energy is to do away with natural resources, such as oil, and so there is going to be a lot of pressure to remove gas stations and go to alternative fuel sources. However, please be assured that once you do get your financing, they can’t take it away. So now is the time to do your strategic planning, and it will benefit you in the long run. Also know that the dollars you invest today will be cheap dollars when compared to the cost of investing five years, ten years from now.
One of the gas station financing programs that is available now, is the federal government’s USDA Business & Industry (B&I) loan program. It is somewhat similar the SBA’s loan programs, but is designed for rural area gas station financing. It appears that the B&I commercial real estate loan program may very well be improving and, as a result, there may be some new and significant lending opportunities, possible changes include:
� USDA like SBA will likely have some 90% guarantees in its stimulus funds
� USDA like SBA will likely pay some borrower fees and may reduce some borrower fee to 1% (from 2%)
� USDA will publish its stimulus rules for lenders to follow by June 1, 2009
� USDA stimulus funds will be delegated to the state for local approval.
To get the biggest bang for the buck and get the stimulus dollars flowing, the USDA B&I may give lenders the loan guarantee during construction as SBA does. Know that lenders considers these loans nationwide with 20% down for a 30-yr. term (no balloon). If you would like to know more about USDA’s B&I commercial real estate lending program, or would like to be updated as these changes occur, please let them know.

Found Some Gas Statioins For Sale If You’re Looking To Finance, You’d Better Have Some Bucks!

December 20, 2014 Posted by admin

The past five years have seen a rise in defaults and foreclosures in the convenience and gas (C & G) industry. You’re out there looking to buy one eh? Owning a gas station or convenience store can be very profitable but it’s sure getting a lot tougher making a living. Unless you live in a cave, you’ve probably noticed that gas prices have gone sky high. In case you didn’t know, the people who own the mom and pop gas stations are making LESS money instead of more.

One of the main reasons for the rise in defaults and foreclosures is that financing was a lot easier years ago. People could purchase a gas station with 10% down (many times THAT was borrowed also) so when times got bad, people just walked away. Competition from hypermarts (Costco, Sams Club, Albertsons, etc.) have driven down operator and dealer profits and has taken traffic away from their inside sales. It’s easier to walk away from a business when you don’t have a significant capital investment than if you’ve put in 20-25% of your own hard earned money.

If you’re looking to buy a gas station or convenience store, count on having at least 15% of non-borrowed money as a down payment if you’re applying for a conventional or SBA loan. Conventional financing will usually require more than15%. This is not an absolute but these loans are looked at now with much more scrutiny from the qualification of the borrower and from the cash flow of the business. One of the most common denominators of defaults and foreclosures is that the borrowers do not put enough of their own money into the transaction. Be prepared with sufficient equity into the deal or be prepared for a decline.

Ways to mitigate this is to take on a partner or provide additional collateral to the lender you are dealing with. Frequently a fuel supplier will also provide equity in return for a long term fuel supply agreement, which is normally ten years.

The days of robbing Peter to pay Paul in order to come up with down payment money are over when it comes to financing this asset class. Good luck in your efforts.

Top 20 Sources Of Business Finance

May 13, 2014 Posted by admin

Not sure what type of financing your company needs?

First it’s important to familiarize yourself with all the different sources of financing that are available so you can decide which vehicle will work best for your company. Once you have a clear understanding you’ll be ready to put your company on track to obtain the funding it needs.

For starters, here are my top twenty sources of business finance:

1) Angel Investors – Angel investors have been responsible for funding over 30,000 small businesses each and every year. With over 250,000 active angels in the country you may want to consider an angel investor network to simplify your search.

2) Asset Based Financing – If you’re company has collateral such as accounts receivable, inventory, equipment or real estate these assets can be used to secure the financing you need but keep in mind you still own your assets, but if you default, the lender can seize them.

3) Bank Loans – Large banks tend to be much more conservative in lending so you may want to consider a community bank or credit union for a small business loan.

4) Business Credit Cards – A fast and easy way to access cash for company expenses but be careful carrying a balance because the interest can be costly. Also make sure your payment experience reports to your business credit files.

5) Business Charge Cards – This is a cash source that has all the convenience of a business credit card without the costly interest.

6) Crowd Funding – Crowd funding is a creative way to raise capital without having to rely on investors or banks.

7) Equipment Leasing – Leasing equipment is a source of financing that allows you to purchase or borrow new equipment with 100% financing.

8) Factoring – With factoring, you sell your company’s accounts receivables to a company (known as a factor) at a discount, in order to free up your cash. The company that purchases the receivables then assumes the responsibility for collecting them.

9) Grants – To see if your company qualifies check out the web site.

10) Letters of Credit – Using a letter of credit can be a great tool for processing smooth payment transactions overseas when dealing with foreign customers.

11) Line of Credit – A line of credit works like a revolving credit card but with much lower interest rates and higher available credit limits.

12) Merchant Cash Advance – A merchant cash advance allows you to borrow off of your future credit card sales. You get a lump sum amount in exchange for an agreement which outlines the percentage that will be taken from every future credit card transaction until the amount you borrowed is paid back.

14) Microfinance Loans – Microcredit loans are less difficult and time intensive to qualify for with loan amounts ranging from $500 to as high as $35k.

15) Purchase Order Financing – This finance option provides your business capital to pay suppliers upfront so your company doesn’t have to deplete its cash reserves.

16) P2P Loans – P2P Loans removes traditional lenders from the finance equation and instead allows lending to take place directly between individuals.

17) SBA backed Loans – SBA backed loans are much more flexible than traditional bank loans lenders but still require supporting documentation.

18) Social Loans – Social lending provides individuals an opportunity to borrow and lend money to each other. Companies like Lending Club and Prosper have spearheaded this funding source.

19) Vendor Lines of Credit – Vendor credit also known as trade credit is when a business extends credit to your company in order to allow you to buy its products upfront but defer the payment for a later date.

20) Venture Capital – Venture capital is neither easy nor fast to be able to tap into but can be a viable source of funding.

Let this list serve as a helpful guide and a reminder that not one single funding program is best because each business has different needs. You may find that several programs on this list will work so don’t feel that you’re limited to just one choice as you work towards your financial goals.