Gas stations and convenience stores represent one of the most popular business acquisitions financed through SBA loans. With consistent cash flow, real estate appreciation potential, and multiple revenue streams, gas stations are attractive investments that SBA lenders understand well. This guide explains everything you need to know about financing your gas station purchase.
Why Gas Stations Are Ideal for SBA Financing
SBA lenders favor gas station acquisitions for several reasons. These businesses typically generate predictable revenue from fuel sales, convenience store operations, and often additional services like car washes or quick-service food. The real estate component adds collateral value, and established stations have documented financial histories that make underwriting straightforward.
The combination of business acquisition and commercial real estate makes gas stations perfect candidates for SBA 7(a) or SBA 504 loans, depending on your specific situation and goals.
SBA Loan Options for Gas Stations
SBA 7(a) Loan
The SBA 7(a) program is the most flexible option for gas station purchases. You can finance the real estate, equipment, inventory, and goodwill all in one loan. Maximum loan amounts reach $5 million with terms up to 25 years for real estate and 10 years for equipment and working capital.
SBA 504 Loan
If you're primarily focused on acquiring the real estate and making significant improvements, the SBA 504 program offers lower down payments (as little as 10%) and below-market fixed interest rates on the CDC portion. This program works well for stations where the property represents a major portion of the purchase price.
Typical Requirements for Gas Station SBA Loans
- Down Payment: 10-20% of total project cost
- Credit Score: Minimum 650, though 680+ preferred
- Industry Experience: Prior gas station or retail management experience strongly preferred
- Collateral: The real estate and business assets secure the loan
- Cash Flow: Business must demonstrate ability to service debt (typically 1.25x debt service coverage)
What Lenders Evaluate in Gas Station Deals
Financial Performance
Lenders examine at least three years of tax returns and financial statements. They analyze fuel margins, convenience store sales, and any ancillary revenue. Consistent or growing sales trends significantly improve approval chances.
Environmental Considerations
Gas stations require Phase I environmental assessments, and often Phase II testing. Underground storage tank compliance, leak history, and remediation records are critical. Stations with clean environmental histories are much easier to finance.
Location and Competition
Traffic counts, visibility, accessibility, and competitive landscape all factor into the lender's analysis. Corner locations with multiple access points typically command premium valuations and easier financing.
Costs Beyond the Purchase Price
Budget for these additional expenses when planning your gas station acquisition:
- Environmental assessments: $2,000-$10,000+
- Equipment upgrades or replacements
- Tank testing and compliance
- Inventory purchase (fuel and convenience store)
- Working capital for initial operations
- Franchise fees (if applicable)
- Professional fees (legal, accounting, consulting)
Tips for a Successful Gas Station SBA Loan Application
- Get experienced: If you lack gas station experience, consider working at or managing a station before buying
- Know your numbers: Understand fuel margins, gallons pumped, and inside sales thoroughly
- Address environmental issues upfront: Don't let surprises derail your deal
- Secure supplier relationships: Have fuel supply agreements ready
- Plan for modernization: Include upgrades in your loan request to improve profitability
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Check Your EligibilityCommon Gas Station SBA Loan Structures
A typical $1.5 million gas station acquisition might be structured as follows:
- Real estate value: $800,000
- Business/goodwill: $500,000
- Equipment: $100,000
- Inventory: $100,000
- Buyer down payment (15%): $225,000
- SBA loan amount: $1,275,000
Monthly payments on this structure would typically range from $8,000-$10,000 depending on interest rates and terms, which successful stations can easily support.