National Petroleum News (NPN) has been the independent voice of the petroleum industry since 1909 as the opposition to Rockefeller’s Standard Oil. So, motor fuels marketing and retail is not just a sideline for us, it’s our core competency.
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have tightened their qualification requirements so tight that even many financially strong investors are not able to get the necessary funds to grow their business, which in turn can shift lending dollars to larger petroleum marketers.” Dougherty joins others in confirming that “the credit market has been very tough for the car wash industry as many operators struggle to get funds either to grow their business or replace outdated equipment. Although we’re see- ing a slight improvement in the financing of car washes, we still have a long way to go before we’re back to pre-recession levels. Lenders are still much stricter and careful with every dollar they lend.” GETTING TO KNOW YOU Nevertheless, since survival requires growth over the long- term, petroleum retailers on the lookout for financing should consider not only the deals they get today, but the relationships they build with lenders for the long haul. “Ask yourself if the lender will be around in a couple of years,” advises NRC’s Ruben. “You need someone who has the capacity to grow with you, so that you don’t end up out- growing the bank.” Choosing a lender who knows the industry is also impor- tant, adds Santy of Patriot Capital. “There are lots of lenders out there,” he contends, “but only a few understand the car wash business—even fewer also understand the needs of petroleum sites.Make sure you work with a lender who has a high level of experience in both.” Many specialty lenders attend major industry events, such as the Car Care World Expo, notes Saei. “Another way to identify lenders who know the car wash business is to research what lenders have historically been active in your market. If you have a relationship with a title company, give them the addresses of the car washes in your area, and they can find out from public records who were the lenders on those facilities.” Accountants, lawyers, brokers, and others who service customers in the car wash industry can refer knowledgeable lenders. “And ask your car wash equipment manufacturer,” Saei counsels. “They often take payment for new equipment directly from the lender or finance company, so that they know who’s active.” At Mark VII, confirms Jeffs, “We maintain relationships with a number of lenders across North America who special- ize in car wash financing programs. So if you check with your equipment manufacturer, we can try to find you a lender suited to your needs. Long-term relationships with lenders are extremely important in assisting customers with increasingly stringent lending requirements.” Finding a knowledgeable lender is especially helpful for operators who are new to the car wash business, adds Santy, www.npnweb.com NPN Magazine because “if you’re getting into it for the first time, you need a professional to help you understand all the costs.” Unless you can finance new car wash construction and upgrades to existing sites through your own cash flow, “then having a good relationship with lenders is para- mount for ensuring that you have access to capital,” says Ruben, “and maintaining that relationship requires good communication on both sides. Lenders don’t like surprises. So especially when an economy is tough and credit is tight, it’s important that your lender understands what’s going on in your business.” Even if things get tough, Ruben continues, “Don’t hide it if your business is taking a downturn. Instead, providing timely information can help you get ahead of an adverse consequence. Lenders will generally work with you if they’re convinced you’re not hiding anything. Viewing them as a partner and not an adversary will keep the kind of relation- ship that will make it possible to go back to them for more money when you need it.” Santy says his best customers “are the ones who are clear in what they need and the timeframe in which they need it. It’s important for everyone to have the same expectations going into the transaction. The lender is working diligently to put the capital in their hands. Having a good plan—and for example, taking care of details like zoning—can help you and your lender know how much money you need with more accuracy.” Being prepared for the loan process, continues Saei, “and presenting a well thought out, complete, and accurate loan package is really critical. Lenders see this as a reflection of how organized and professional you are, which will then be seen as an indicator of your potential to be a good, long-term cus- tomer. So if numbers aren’t your strong point, I highly suggest you seek assistance from a professional such as your CPA or an experienced broker with strong industry knowledge.” Starting and then maintaining a relationship with a lender on a strong footing “has become much more impor- tant since 2007,” states Saei. “During the peak before the financial crisis it was common to see multiple lenders chas- ing a deal. Today, lenders are tending to their existing, estab- lished customers first. This is especially true if the lender is a bank. They don’t just want to make a loan, but to also estab- lish a depository relationship and offer lines of credit and other services.” For that reason, Saei advises petroleum retailers who are potential borrowers to “establish a broad relationship with their lender. Possibly move some of their personal accounts to the bank and get to know your banker on a personal basis if possible. Then make sure they have a good understanding of your business by taking the time to educate them about what you do.” MARCH 2011 25