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Through the years, SBA financing has been a staple of financing for dealers and operators. Since the economy has worsened within the last several years, the petroleum retail industry has gotten even worse. With the fluctuation in fuel prices and our failing economy, foreclosures on loan for gas station and convenience stores have been at record highs.

Recently, the SBA had made financing for gas stations and conveniences virtually prohibitive. The SBA had required all stations more than five years to have a Phase II environmental and all transactions required a seller indemnification, whether there had ever been an environmental issue or not.

To add insult to injury, the SBA also required a separate business valuation from an unbiased company in addition to the appraisal.

Can we say "we really don't wish to accomplish gas stations?"

It will come as no surprise that the SBA adopted this posture. With high profile fraud cases from some non-bank lenders in recent years, record default and foreclosures, it is no surprise they made them difficult at the very least to acquire financing. In fact, the petroleum retail asset class was not significantly worse than other asset classes.

With the disappearance of a feasible secondary market, most lenders have either ceased doing SBA loans or significantly scale back the total amount of SBA financing they would do. Only the bigger banks could lend and portfolio their loans.

Fortunately with the stimulus package in 2009, much, although not totally all, of these conditions have changed. First, the SBA will no longer required indemnification agreements on all transactions except those where environmental conditions exists and an open file exists with the State.

Secondly, the SBA will no longer need a Phase II environmental except in cases where environmental conditions exists and an open file exists with the State.

One can check through the State's DEP or DEQ to make sure that there is no open file (meaning there has been leakage, spillage or migration reported) so the chance of decline will undoubtedly be reduced significantly.

In addition, the SBA is currently allowing lenders to base their loans away from LIBOR along with Prime, giving the banks more options to really make the loans more profitable.

With the streamlining of SBA operations out of Sacramento, California, SBA financing continues to be the best source of financing. As usual, having a well put together package is area of the battle.

In 2009, temporary changes that'll last to the end of 2009 are the waving of the SBA guarantee fee (which can be substantial) and the guarantee percentage increase to 90%. This should give banks incentive to produce capital available again.

Aside from what type of financing you select, make sure that when applying for loan for gas station, you cope with people that specialize in this asset class and know both the lending and petroleum industries.