Buy a gas station in Michigan

• SBA 7(a) is the workhorse for first-time buyers. Budget 10–20% down. It covers the business, the real estate, equipment and working capital in one loan. SBA 504 pairs a bank loan with an SBA-backed piece for the real estate and fixed equipment — up to $5M (up to $5.5M only for qualifying manufacturing and energy projects).
• Most lenders want industry experience — you, a partner, or a strong manager. A first-time buyer with no gas station history needs a lender who does gas. We point buyers to lenders who finance Michigan stations every month; see our preferred referral partners.
• Your proof of funds is only needed with your offer — never to view a listing’s numbers, and never before a seller’s name is shared. That’s our standing rule.

SBA 7(a) loans ↗ · SBA 504 loans ↗

This is the part of a Michigan deal that deserves your closest attention, because Michigan splits its rulebook between two agencies and a state fund.

LARA Bureau of Fire Services runs the tank program: registration, rules and inspections for underground storage tanks under Part 211 of the Natural Resources and Environmental Protection Act (1994 PA 451), following the federal tank standards with Michigan amendments. EGLE — the Department of Environment, Great Lakes, and Energy — oversees cleanups when tanks have leaked, under Part 213. The Michigan Underground Storage Tank Authority (MUSTA) runs the cleanup fund described below.

Ask for, before you offer:

• The station’s LARA registration record and latest amendments, inspection history and leak-detection records. Confirm every tank on site is registered, and get tank ages and materials.
• Any release history. Has a leak ever been reported? If a cleanup happened, get EGLE’s closure documentation. If a Part 213 site is still open, it is a matter of public record — assume your lender will find it, price it, and ask who’s responsible.
• How the seller meets financial responsibility, and whether that mechanism is the state fund. Whatever covered the seller does not transfer to you — you set your own coverage from day one of ownership.

MUSTA and the Underground Storage Tank Cleanup Fund (Part 215). Michigan’s fund is generous by the standards of these programs, and it’s how most owners satisfy their financial-responsibility duty. The rules that matter to a buyer:

• It covers releases discovered on or after December 30, 2014, reimbursing eligible cleanup costs up to $1 million per claim, minus your deductible — $2,000 if you and your affiliates own or operate seven or fewer tanks, $10,000 at eight or more. (For releases discovered before December 30, 2014, a smaller Legacy Release Program pays up to $50,000 per release with a 50% co-pay.)
• Eligibility is conditional: the tanks must be registered, your financial-responsibility mechanism must be documented, and any confirmed or suspected release must be reported within 24 hours of discovery.
• Only the owner or operator at the time of discovery can file the claim. This is the one to get right at the closing table: a release you discover the week after closing is yours to claim; a release the seller knew about — or that your Phase I turns up before closing — is the seller’s claim, and it does not pass to you. If a pre-closing release is anywhere in the picture, the contract must say who files, who runs the cleanup and who keeps the reimbursement.
• The fund pays for cleanups, not tank removal, repairs or upgrades. Budget new tanks separately.

After closing — your 30-day duty. As the new owner you must register the tank system with LARA’s Storage Tank Division within 30 days of taking ownership (form BFS-3821), and report any later change in the information on file within 30 days too. Michigan no longer charges the annual registration fee on tanks holding refined petroleum products, but registration and annual renewal are still required. Put the filing in your closing documents so the clock never runs on you.

LARA Bureau of Fire Services, Storage Tanks ↗ · Michigan Underground Storage Tank Authority ↗ · EPA underground storage tanks ↗

Liquor — MLCC (SDM and SDD). Beer and wine to go require an SDM license (Specially Designated Merchant); spirits to go require an SDD (Specially Designated Distributor), both from the Michigan Liquor Control Commission. Michigan is a control state for spirits: the state is the spirits wholesaler, and an SDD buys through that system.

• Both licenses are quota-capped — one SDM per 1,000 people and one SDD per 3,000 in each city, village or township (waivable only in narrow cases, such as no license of that kind within two miles). Most deals therefore transfer the seller’s existing licenses rather than applying for new ones.
• A transfer is an approval process: the Commission investigates you, the source of your money and the premises before it approves. Start it as soon as the offer is signed, plan on it taking real time, and expect the license money to be held in escrow until approval lands.
• Two traps: the seller’s unpaid taxes or license violations can hold your transfer up (see the tax escrow in §4), and a new SDD licensee commits to stocking a minimum opening spirits order — a small first-year cost to plan for, not a surprise.

Lottery. The Michigan Lottery retailer license does not transfer — state rules (Administrative Code R 432.7) prohibit it, and the seller must notify the Lottery in writing at least 20 days before an ownership change. You apply for your own retailer license: a $150 application fee, and the Lottery’s guidance is to get the change-of-ownership application in about 45 days before closing so ticket sales don’t gap at the changeover.

Cigarettes and sales tax. Michigan has no retail cigarette license — the $2.00-per-pack cigarette tax is prepaid by licensed wholesalers, who stamp every pack. Your duty is sourcing: buy only Michigan-stamped product from licensed wholesalers, and count cigarette inventory carefully at closing (the stamps on it are tax already paid). You do need to register for Michigan sales tax in your own name — tax accounts never transfer from a seller.

Food. If the store sells food, you need your own food establishment license from MDARD (Department of Agriculture and Rural Development). Guidance is to apply at least 30 days before you take over, and there’s an inspection before the license issues.

Fuel. No separate state license to sell fuel at retail — what transfers is the supply agreement (check the term, gallons owed, and whether the supplier consents to assignment), plus the LARA tank registration in §2.

Michigan Liquor Control Commission ↗ · Michigan Lottery ↗

The tax escrow — Michigan’s successor rule. Under MCL 205.27a, when you buy a Michigan business you must escrow enough of the purchase price to cover the seller’s unpaid Michigan taxes, interest and penalties, until the seller produces a state treasurer’s receipt showing the taxes are paid or a Treasury certificate that none are due. The seller files their final return within 15 days of the sale, and clearance is requested on Form 5156 — Treasury works to about a 60-day clock, so start it at signing, not at closing. If the seller waives confidentiality in writing, Treasury will disclose the known or estimated liability to you within 60 days, which lets the escrow be sized to the real number. Skip the escrow and you are personally liable for the seller’s unpaid taxes, up to the fair market value of the business (less what went to superior secured interests). Treasury has even taken the position that buying a liquor license by itself can trigger the rule. Every Michigan deal needs this step — the sellers who "forgot" a tax bill are exactly who it’s for.

Real estate transfer tax is the seller’s, by law. Michigan charges $3.75 per $500 to the state plus $0.55 per $500 to the county — $4.30 per $500, about 0.86%, effectively the same statewide — and the statute puts both pieces on the seller/grantor. Contracts can shift the economics, so confirm before you compare two deals on headline numbers alone.

• Insist on 2–3 years of tax returns, monthly gallons and POS reports — not a broker’s summary. Tie fuel gallons to supplier statements. In Michigan, insist on monthly figures: up-north and lake-corridor stores are seasonal, and annual totals hide it.
• Price the SDD separately. If a store holds a spirits license, part of what you’re buying is a quota asset that can’t be re-created. See it broken out, and confirm with the MLCC that it’s in good standing and transferable.
• Reconcile the bottle deposit. Ask how returns are handled — space, labor, float — and settle the deposit position at closing. Michigan stores live with this daily; it’s a real line in the P&L whether it’s written there or not.
• Read the supply agreement. Term left, gallons owed, assignment consent, and what happens if you rebrand. On a leased site, read the lease the same way: years remaining, options, rent steps.
• Budget a Phase I environmental report. SBA lenders require one. Michigan-specific: a clean Phase I plus a clean LARA/EGLE record check is what makes your lender (and your MUSTA position) comfortable.

An offer is a signed Letter of Intent (LOI) plus your proof of funds — the first and only time proof of funds enters the picture. Due diligence runs alongside your lender: verification of the numbers in §5, the Phase I, the LARA registration transfer and your 30-day clock, the MLCC license transfers, your Lottery change-of-ownership application, supplier consent, and the tax-escrow and Form 5156 steps from §4. At closing, inventory — fuel, store stock, cigarettes and the bottle-deposit position — is counted and settled. Most Michigan deals close 60–90 days after the LOI; the MLCC transfer and Treasury clearance are usually the long poles, which is why both start on day one.