Gas Station Loans: Financing Options for Gas Stations

  • A gas station loan can help you buy a new gas station, service station, or convenience store, expand an existing one, or increase the number of gas stations you own.
  • Gas station financing or a business line of credit can also help you with day-to-day costs associated with running a gas station or convenience store. 
  • Because of the cash-only basis of many gas station customers, it may be difficult to secure a loan or find a lender due to lack of proof of income. 

What Is a Gas Station Loan?

A gas station loan is financing or debt that gas station owners can use to purchase a new gas station or expand an existing business. You may also use a gas station loan to increase your cash flow to help pay for everyday expenses like utility bills, payroll, or inventory. 

As with other business financing, a gas station loan or financing can come from a number of sources or loan programs. The type of financing you choose will depend on your goals, business history, business credit, and a number of other factors. 

How a Business Loan Can Help Your Gas Station

As any small business owner knows, there are many costs associated with running a business like a gas station or convenience store. Financing can help you get the money you need to buy or build a gas station. A gas station loan can also help you increase your working capital or cash flow to pay for normal operations costs or unexpected expenses. 

A few ways a borrower may use their financing include:

  • Purchasing a gas station or convenience store outright
  • Buying commercial property to expand the footprint of the existing gas station
  • Paying for upgrades or renovations to the gas station
  • Buying real estate and equipment to build a new gas station 
  • Funding other projects to expand the business like adding a car wash or other amenities
  • Covering payroll
  • Buying inventory
  • Paying for utilities

Types of Loans for Gas Stations

There are a variety of small business loans that may be a good option for gas station owners. 

Business Bank Loans

A business bank loan may be a good fit in the gas station industry, depending on your qualifications and the property type. Commercial loans and small business loans can allow you to use the money for a variety of purposes, from purchasing a gas station to paying for everyday expenses associated with running a business. The type of loan you qualify for will depend on your business credit score and how good your financials are, as well as the loan terms and repayment terms.

Commercial Real Estate Loans

If you’re looking to buy an existing gas station property or build a new one, a commercial property loan may be a good option. You can also use a real estate loan to refinance and get cash out of your existing property. You will probably need a down payment with this option, as well.

Small Business Administration Loans for Gas Stations

The Small Business Administration (SBA) offers several loan options for gas station owners that are more flexible than a traditional mortgage or real estate loan. SBA loans are generally more flexible than other financing, although there may be stricter qualifications.

As their most common loan program, an SBA 7(a) loan can be used to increase short- and long-term working capital, refinance business debt, or buy equipment. However, you have to have eliminated your other funding options before you seek out this type of loan. 

An SBA CDC/504 loan is another financing option that allows a gas station owner to purchase or build existing buildings, land, new facilities, and machinery and equipment. You can also use it for improving existing buildings, land, utilities, parking lots, and landscaping. However, unlike the SBA 7(a) loan, you can’t use this loan for working capital, to buy inventory, or to refinance debt. 

USDA Business and Industry Loan Guarantees

The U.S. Department of Agriculture has a rural development program for those who want to run a rural business, including a gas station. These USDA Business and Industry (B&I) loans are available to gas station owners who want to run a business that’s located in an area with fewer than 50,000 residents. 

A USDA B&I loan can be used for:

  • Business development
  • Buying real estate
  • Purchasing equipment or machinery
  • Purchasing supplies and inventory
  • Refinancing debt to improve cash flow or create jobs

This loan requires collateral, usually your gas station. The USDA allows certain lenders to provide the financing, and they will negotiate interest rates with you individually. 

Business Line of Credit

If you need financing to cover equipment, inventory purchases, or day-to-day expenses, a business line of credit may be a good fit. Similar to a business credit card, you can use any amount of the money in your line of credit up to your limit, and you only pay interest on the amount you borrow. It can also be easier to qualify for a line of credit than a traditional commercial loan, which can be very helpful for a gas station owner.

How to Qualify for a Gas Station Loan

Qualifying for a gas station loan depends on what type of loan you decide to apply for, but there are some general requirements that any lender will ask of you:

  • Business and personal credit scores and history. This is by far the most important factor when applying for any loan. Your credit score determines how risky it is for a bank or financial institution to lend you money. 
  • Your income. In order to determine how capable you will be of repaying the loan, the bank will want to know what your business income is. Again, because many gas station and convenience store customers use cash to pay for items, you may not have a great paper trail to prove this. You’ll probably need to rely on your tax returns to show your annual income. 
  • Debt-to-income ratio. A lender will want to know what other debts you owe to help them determine if you’ll be able to pay them back for the new loan. 
  • Assets and collateral. A financial institution may want you to put collateral up to ensure that if you default on the loan, they have something to take and sell to pay off the debt. This could be your gas station, equipment, or even personal assets like your home or personal money. 
  • Origination fees. You’ll probably have to pay certain fees to the lender to process your loan application, so you’ll need to have that money upfront. 

What Do You Need to Apply for a Gas Station Loan?

In general, you’ll want to have the following at the ready to apply for a gas station loan:

  • Income tax returns (personal and business)
  • Income statement and balance sheet
  • Bank statements (personal and business)
  • Identification (drivers license or passport)
  • Leases
  • Business licenses
  • Articles of incorporation
  • Your resume
  • Any financial projections
  • Collateral 

You may be required to provide other documentation depending on the type of loan you apply for. 

Which Lenders Offer Loans for Gas Stations?

Other than the loans mentioned previously in this article, there are a number of lenders that offer loans for gas stations:

  • JPMorgan Chase
  • Capital One
  • Wells Fargo
  • Greenbox Capital
  • CREFCOA
  • RMC Funding 
  • Quickbridge

If you have an existing relationship with a bank or financial institution for personal banking or other business banking services, you may be able to secure a gas station loan with them. 

Is It Hard to Get a Loan for a Gas Station? 

Unfortunately, because of their operating model, it can be difficult to get good financing options for gas stations from traditional lenders. However, with the right preparation — especially knowing and improving your business credit score — there are ways to secure financing for a gas station. Nav helps small business owners of all kinds understand the factors that go into your business credit score and offers tools to find the financing that you’re most likely to qualify for. Sign up for an account today to get started.

This article was originally written on May 9, 2022.

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