This topic contains 2 replies, has 2 voices, and was last updated by Steve Grelle (SBA Guru) 10 months, 2 weeks ago.
LOAN TO OPEN A GAS STATION
HOW MUCH DO I NEED FOR DOWN PAYMENT? AND IS IT POSSIBLE TO GET MORE INFORMATION ON A LOAN OF THAT TYPE?
The amount of your down payment is going to depend on a lot of factors, such as:
– Type of loan you’re getting
– Your personal credit history
– Your lender’s underwriting process
– The amount of collateral you have to put up for the loan
– What your business plan looks like
– How confident your lender is in your ability to repay the loan
Most traditional loans will require 10-20% down but it could be as much as 30% if you don’t have any collateral.
The down payment does depend on a lot of different thing. For an SBA 504 Loan the standard down payment is 10% but a gas station is a special purpose property, which requires an additional 5% and if you are purchasing it it is likely to be considered a start-up which typically requires an additional 5% for a total of 20%. This is determined by the lower of 80% of the purchase price or 80% of the Appraised as completed value. Whichever is lower. If you do an SBA 7(a) you can typically do just a 10% down and even include goodwiill. The rate is typically lower and fixed on the SBA portion on the 504 and higher and variable on a 7(a). Ultimately the down payment above and beyond that is a credit decision on the part of the Bank and CDC if you are doing a 504 loan.
On a side note, A gas station typically requires a Phase I and Phase II environmental analysis which takes a bit of time. Be sure to build that into any contingency in your contract and be ready for the added cost.
Disclaimer: We spend hours researching and writing our articles and strive to provide accurate, up-to-date content. However, our research is meant to aid your own, and we are not acting as licensed professionals. We recommend that you consult with your own lawyer, accountant, or other licensed professional for relevant business decisions. Click here to see our full disclaimer.
Product or company names, logos, and trademarks referred to on this site belong to their respective owners.