SBA loans for gas stations: how buyers finance a station

The SBA doesn’t usually lend the money itself. A bank or other approved lender makes the loan, and the SBA guarantees part of it. That guarantee is why lenders can offer longer terms and smaller down payments than on many conventional loans.

For a gas station, an SBA loan can often cover the business, the land and building, the equipment and some working capital in one package.

SBA 7(a) is the most common route for owner-operators buying a station. The maximum loan is $5 million, and it can be used for buying a business, real estate, equipment and working capital (SBA). When real estate is part of the loan, terms can run up to 25 years.

SBA 504 is built for real estate and major fixed assets. A bank and a certified development company each fund part of the project, and the borrower puts in the rest. The maximum 504 loan is $5.5 million, with 10, 20 and 25-year terms (SBA). It suits buyers focused on the property, or building or rebuilding a site.

Some deals combine a bank loan with seller financing for part of the price. Your lender will tell you what it allows.

• Your personal financial statement, credit report and recent tax returns
• Retail, fuel or management experience, or a plan for an experienced manager
• The seller’s last three years of tax returns and P&Ls, plus fuel gallon and inside sales reports
• The purchase agreement or letter of intent
• The fuel supply agreement and the lease, if the land is leased
• Cash for the down payment and closing costs, and where it comes from
• A Phase I environmental report, and sometimes more (below)

Plan on a down payment of at least 10% of the project, often more for larger or riskier deals. Your lender will set the exact number.

SBA’s environmental policy treats gas stations as an environmentally sensitive business, so expect the lender to require a Phase I environmental site assessment, and possibly a Phase II with soil or groundwater testing if the Phase I flags a concern. The tank records, compliance history and any open cleanup case all come into play. Our buyer’s due diligence guide explains what is checked and how buyers protect themselves.

1. Get pre-qualified with a lender that does gas station loans before you make offers.
2. Line up your down payment and document where it comes from.
3. Ask for the seller’s numbers early, under an NDA.
4. Read the fuel supply agreement: the term, gallons and any payback can affect the loan.
5. Budget for reports: appraisal, Phase I and any equipment or tank testing.

Need a lender who knows this business? See the lenders on our Preferred Partners page and ask us for an introduction.