Sunoco
112, Inc. is a retail gasoline and auto repair facility in East
Patchogue NY. The station has existed in its present location
for 50 years- certainly a long time, stable business. Current
owner Arthur Kudlek purchased the business in 1990 and recently
was given the opportunity to stabilize his operation by purchasing
the property from Sunoco. Despite the long history of the business,
a line of banks were reluctant to take on the environmental challenges.
Fortunately,
the SBA 504 program, through the Long Island Development Corporation
(LIDC), entered the mix to save the day. LIDC agreed to provide
a second mortgage to help Mr. Kudlek purchase the property and
make needed improvements. Because the SBA 504 loan was willing
to take the second lien position, HSBC agreed to step up to the
plate and finance 50% of the project cost in a first mortgage
position. With LIDC’s 40% second mortgage, the principal
injected 10% of the total project cost and was able to acquire
the property, assuring the long term continuance of this local
business.
In
this case, any environmental issues were taken care of by Sunoco.
If that had not been the case and there had been concerns, alternatives
would have been entertained by LIDC. In the case of a gas station
project financing several years ago, the lenders were not able
to resolve the environmental issues so they took other property
as collateral! The bottom line is that, when using the SBA 504
loan product, creative solutions are available to meet the business’
needs.
So,
if you are a gas station owner, purchaser or conventional lender,
keep the SBA 504 loan program in mind to help create financing
solutions. For information on the SBA 504 Loan Program, contact
LI Development Corporation at 516 433 5000
