Every day, millions of Americans stop at a service station to fill up their gas tanks. According to the U.S Bureau of Labor Statistics, there are roughly 115,000 gas stations in the U.S, representing nearly $250 billion in revenue. The gas station industry is thriving and growing more competitive every year. Gas station owners may find themselves searching for the best modern and reliable equipment in order to set themselves apart from their competitors. They also may be looking for ways to expand their business, be it through new locations or by purchasing equipment to expand their services. While securing equipment financing for gas stations can be difficult, there is an optimal solution for both equipment and real estate acquisitions.
The SBA 504 loan program allows gas station owners to finance fixed assets, which includes both real estate and equipment, with only 15% down payment and a long term, below market rate. The 504 loan is accessible, and the terms are more attractive than what conventional financing offers.
Why Real Estate and Equipment Financing for Gas Stations Should Start with an SBA 504 Loan
The SBA 504 loan is the most advantageous solution for gas station owners looking for financing. Conventional financing through a bank or online lender typically includes a high down payment, variable interest rates, and in many cases a balloon payment. Conversely, the SBA 504 loan allows gas station owners to finance real estate or equipment with a service life of at least 10 years with the following benefits:
- A below market, FIXED interest rate
- Long terms of 10, 20, and 25 years
- As little as a 15% down payment
- No additional collateral required
- No appraisal required on the equipment
- Can include tax, shipping and installation of the equipment in financing package
- No balloon payment
Bottom line – with the 504 loan you can solidify equipment financing for your gas station with all the above-mentioned benefits in conjunction with purchasing real estate. It’s a win-win.
How Exactly Does a 504 Loan Work?
The 504 loan is administered by a Certified Development Company (CDC) such as TMC Financing. The loan itself is granted in conjunction with a conventional lender that will provide 50% of the total loan amount. Remember, the 504 loan offers a fixed, below-market rate. Business owners would only need to provide 10% (15% for gas station owners) of the loan amount as a down payment. It is important to note; this down payment is often much less than traditional commercial loans or equipment leasing options.
Prequalifying for a 504 Loan
TMC Financing can prequalify business owners looking to finance a new gas station or new gas station equipment in California or Nevada within 48 hours. It is a seamless process at no cost to the potential borrower. Three documents are needed – three years of personal and business tax returns, a personal financial statement, and interim financials.
TMC acts as your advocate starting with the prequalification and continues to provide guidance throughout the entire loan process. The prequalification gives you the opportunity to establish a relationship with a Certified Development Company who will be your supporter from start to finish. Let us help you find the loan package that best fits your business needs.
How Else Have Gas Station Owners Used the 504 Loan to Expand?
The 504 program often finances a commercial real estate acquisition in conjunction with an equipment purchase. However, what is lesser known, is that the 504 program can ALSO finance the construction of a brand-new gas station from the ground up.
For example, in 2016 father-son duo Behrooz and Ali Mirshafiee, worked with TMC Financing to secure over $5.5m in total project financing. Their SBA 504 loan helped them to finance the purchase of vacant land, equipment, and construction of a gas station and a convenience store.
The Mirshafiees’ gas station located in Hesperia CA, is now open and thriving. The best part is the Mirshafiee family only had to contribute a 15% down payment, and their loan is coupled with a 20-year below-market fixed interest rate.
More about TMC Financing
TMC Financing is an SBA Premier Certified Lender and a high-volume loan provider. TMC has over 35 years of expertise and has helped over 5,000 businesses. TMC operates in California and Nevada and is your best source for SBA 504 Financing.
Remember, whether you are a business owner aiming to:
- Finance equipment
- Purchase real estate, including land or a building
- Construct, upgrade or renovate buildings
- Refinance conventional debt
Contact a TMC loan expert to find out more about the 504 prequalification process and how to put your business one step ahead.