Fueling the Future: Loan Options for Gas Stations
Tuesday, 25 September 2012 21:00
Recent protests by gas station owners in New Jersey and Pennsylvania has brought to light some of the pressures facing these embattled small business owners in the modern marketplace. The franchise owners of gas stations supplied by Lukoil North America raised their prices considerably in response to Lukoil's alleged unfair pricing tactics in the region; at some stations, the prices were increased to nearly $10 per gallon. According to Sal Risalvato, the executive director of the New Jersey Gasoline-Convenience-Automotive Association, Lukoil charges its franchise owners at least 7 cents more per gallon of gasoline than competing fuel companies operating in the area, putting them at a significant disadvantage in the competitive marketplace. Lukoil ranks second in Russian oil producers and entered the U.S. marketplace in 2003; it now supplies over 500 gas stations through franchise agreements and other contractual obligations.
An industry in the midst of change
Most commercial gas stations have been under financial pressure for some time. Reduced supplies of fuel combined with an increasing focus on fuel-efficient vehicles have squeezed out some smaller gas station owners in favor of larger corporations that can buy fuel in bulk for lower overall prices. To make matters worse, consumers are increasingly critical of high fuel prices and are looking at alternative ways to power vehicles. For many gas station owners, the Lukoil protests are just another sign of the increasingly competitive market in which they do business.
Making the transition to alternative fuels
For some gas station owners, the answer may be to offer a wider range of choices for consumers. Florida recently acquired its first compressed natural gas fueling station; other states and cities have already created initiatives to encourage the availability of this alternative fuel. Compressed natural gas, also referred to as CNG, is a cheap, clean source of fuel that is in plentiful supply in the U.S. CNG-fueled vehicles are joining the fleets of many major corporations. This green-friendly alternative to traditional gasoline can be a popular addition for smaller gas stations and can represent a solid investment in the future. Charging stations that provide quick power for electric vehicles are also popular and can be a cost-effective addition to the traditional gas station lineup.
Financing the future
These upgrades are not cheap, however. In most cases, gas station owners will be required to come up with considerable collateral in order to obtain the financing needed to install new natural gas fueling stations and electric charging centers on their current property. Some municipalities and states may offer financial incentives or tax breaks for these green-friendly additions, but primary financing is likely to come from business lenders in the financial marketplace.
A wider range of options
CNF Exchange offers owners of gas stations and other small businesses the in-depth help they need to prepare effectively for the future. By connecting borrowers with lenders through the innovative Investor Exchange program, CNF Exchange provides access to a more extensive lineup of lending options. Added services include step-by-step help with the entire lending application process to ensure the highest chance of success in the competitive lending environment.
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