ASK THE EXPERTS

Q - Is the purchase of a gasoline station where the deed includes a provision restricting the brand of service station that may be operated on the premises eligible for a 504 loan?

A – No. Restrictions on the brand of service station to be operated on the premises are not acceptable to SBA either as part of the purchase and sale agreement or if already contained in covenants running with the land.

The deed restrictions in question are typically seen as part of a buy/sell agreement between an oil company and a purchaser of one of its gasoline stations. SBA found the deed restrictions to be unacceptable because they severely compromise the marketability of the business real estate collateral that would be securing the SBA-guaranteed loan.

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