Ontario Commercial Mortgage Financing For Gas Stations

“What Types of Commercial Mortgage Loan Options Are Available For Ontario Based Gas Stations?”

While there are still some institutional lenders that will look at gas station financing, the majority of banks, credit unions, and term lenders are only interested in gas stations that are relatively new, are under the flag of a major gas supplier, and have at least one strong tenant that contributes to the cash flow of the business.

To qualify with an institutional lender, you are going to also have to have a recently completed phase II environmental report, a commercial property appraisal, contamination insurance policy, and a tank monitoring system.

The institutional requirements will be very high and the time it take to complete the financing will likely take several months due to all the supporting information that will need to be collected or created by third party consultants.

Even the institutional lenders tend to be very geographic specific and will only entertain a gas station financing application if it fits into their portfolio at the time when financing is required.

Needless to say, it can be very difficult, costly, and time consuming to secure an institutional commercial loan for a gas station purchase or refinance.

As a result, the majority of Ontario gas stations are financed by private lenders who tend to be focused on the provincial gas station market and are very well educated into gas station operational risks as well as how to identify a gas station they will consider for financing and how to quickly determine if one is not going to be of interest to them.

Even with private lenders, the environmental assessments, tank condition, tank monitoring, and liability insurance are going to be important as any existing or perceived environmental liability could render their security worthless.

With private lenders that provide commercial loans for gas station properties in Ontario, they have a high degree of focus in their due diligence on the performance of the operating business. The most important statistic that many of them look at is the annual volume pumped by the station. Even if a station has marginal profitability (which could be caused by a number of management issues) as long as the volume numbers are at a certain level for the size and location of the station, the application can get serious consideration from a lender.

Like most private mortgage lenders, the security being offered must be looked at in terms of its resale value. The private lender will not provide gas station financing unless they are prepared to take ownership of the station in the event of mortgage default and are confident in their ability to re-market the security if necessary to have the mortgage repaid.

Similar to other types of private lending, the incremental interest rate can be 4% to 10% above comparable institutional rates, depending on a specific location, borrower profile, and risk assessment.

Private lenders will also tend to make their decisions much faster than traditional lenders and can offer a variety of mortgage commitments including short term interest only, long term interest only, and amortized principal and interest payments.

If you have a gas station mortgage financing need in the province of Ontario, give me a call and we can discuss what types of options are available for your situation.

Click Here To Speak With Mortgage Broker Joe Walsh

Dominion Lending Toronto

About the Author Joe Walsh

I'm a Toronto Mortgage Broker that arranges mortgage solutions on residential and commercial real estate property. With over 30 years of mortgage financing experience, I'm able to quickly assess your financing requirements and provide relevant solutions for your immediate consideration. Joe Walsh Google+ YouTube Channel

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