Buying a gas station is a unique commercial real estate investment because it’s not just a real estate transaction, nor is it merely “buying a store.” It combines buying a property with purchasing specialized equipment and inventory. You’re also taking on a business that requires managing high daily transaction volumes from multiple revenue streams, all within a single operating model.
It’s precisely because of this complexity that lenders evaluate loan applications for gas stations differently from standard retail store or restaurant loans.
The deal depends on so many factors:
- Environmental liability
- Fuel brand supply agreements
- Equipment condition
- Location value
Lenders have to weigh all of these when assessing the risk they have to take on and structuring your terms.
What types of gas station loans are available?
There isn’t a single type of gas station loan, and that’s a good thing. You can draw from a variety of financing products depending on your goals, and sometimes even your timeline.
Those products generally fall into two categories:
- loans that can be used to acquire the business and/or its major fixed assets (including the building itself)
- financing used to cover ongoing operating needs.
Some products, particularly SBA 7(a) loans, can cover both depending on how the funds are structured.
1. SBA 7(a) Loans
The SBA 7(a) loan, backed by the US SBA, is one of the most popular tools for acquiring a gas station or funding major capital improvements because the terms of the program are difficult to match with conventional financing. Loan amounts can go as high as $5 million and repayment terms may extend up to 25 years.
You can use a 7(a) loan to:
- purchase the station outright (including land, buildings, equipment, and fuel brand rights)
- fund major renovations
- install new fuel systems
- refinance existing debt
Interest rates are generally tied to the prime rate plus a margin. The government guarantee reduces the risk for the lender, so it can be easier for strong applicants to secure financing (especially established operators with solid financial histories).
2. SBA 504 Loans
If the goal of your transaction is primarily to acquire physical real estate and long-life equipment for your own business operations, you may be able to use an SBA 504 loan.
A typical 504 structure requires a down payment of just 10%. The rest is covered by a CDC (40%) and a commercial lender (the remaining 50%). Because the CDC portion of the loan comes with a fixed interest rate, you can enjoy predictable monthly payments over 10-, 20-, or 25-year terms.
504 loans may work well if you are looking to purchase high-value property outright without tying your funds in upfront equity.
3. Conventional commercial real estate loans
If you find the documentation requirements and extended review process of government-backed programs to be too slow for your timeline, you can always use conventional commercial mortgages to acquire a gas station.
Conventional loans close much faster than SBA products, so they’re a good option for well-capitalized buyers who have strong credit reserves and need a streamlined process.
Terms can range from 5 to as long as 20 years. These loans can be structured with fixed or variable rates and a balloon payment at maturity.
Lenders will usually require a larger down payment, though: often 20% to 30%. They will also evaluate the application heavily on both the property’s appraisal and on the strength of your overall balance sheet.
4. Equipment financing
As you know, gas stations require expensive and highly specialized machinery including:
- fuel dispensers
- underground storage tanks
- canopy structures
- car wash systems
- point-of-sale hardware
- store HVAC units
If you don’t want to tie up your primary acquisition loan to cover these items, you can take out equipment financing to fund them separately.
Repayment schedules can be structured to match the useful life of the equipment, typically ranging from 24 to 84 months. Loans may carry fixed or variable interest rates based on your credit profile.
The equipment itself will serve as collateral for the loan, so approvals tend to be faster and qualification standards less stringent.
5. Business lines of credit
It’s not easy to operate a gas station: you need to manage uneven daily cash flows and purchase fuel and retail inventory on a regular basis. If you need access to funds you can draw/pay off and reuse as needed, you can apply for a business line of credit.
This type of financing is suitable for:
- covering fuel inventory orders
- managing payroll during seasonal lulls
- handling unexpected maintenance emergencies
- replacing damaged store equipment
- buying extra stock before a busy period
A line of credit allows you to pay interest only on the capital you actually draw (unlike a standard term loan that gives you a single lump sum).
6. Working capital loans
If you need a quick cash injection for daily operational needs or bridging short-term slow periods, you might benefit from a working capital loan. These are short-term, unsecured loans that may be repaid over 6 to 24 months. Lenders usually prefer to lend to gas stations that have shown a consistent revenue stream and at least 6 to 12 months of operating history. Your credit profile doesn’t need to be perfect, but you have to show that the business generates enough cash to repay the loan.
7. Revenue-based financing
Does your gas station have a high daily card volume and enough operating history to document it? You may be able to qualify for revenue-based financing. In exchange for an upfront lump sum, you agree to remit a fixed percentage of your daily or weekly sales. This means that your payments essentially scale up or down based on your daily transaction volume.
The effective borrowing cost is, of course, higher than a standard bank loan, but that’s the trade-off for speed: approval and funding are usually completed within 24 to 48 hours.
Here at Private Capital Investors, we specialize in commercial real estate loans collateralized by the property itself. We can put together a financing solution that suits your strategy if you intend to buy a gas station together with the underlying property. Send us your project details.
