Business loans to buy a gas station

Before you buy a gas station, learn what it takes and how to find financing.

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Gas stations are on just about every corner. Even with the push towards green cars and hybrids, there’s still a huge market out there for gas and convenience store items. If you’re looking to invest in a commercial property and want to get hands-on with your business, a gas station could be the right choice for you.

SharpShooter Funding Business Loan

  • Min. Loan Amount: $1,000
  • Max. Loan Amount: $300,000
  • Interest Rate: Starting at 5.49%
  • Requirements: Annual business revenue of $60,000
  • Borrow up to $300,000
  • Online loan application

SharpShooter Funding Business Loan

SharpShooter Funding offers loans up to $300,000 for small business owners who have been business for at least 100 days and can show a minimum of $5,000 in monthly deposits ($60,000/year).

  • Min. Loan Amount: $1,000
  • Max. Loan Amount: $300,000
  • Interest Rate: Starting at 5.49%
  • Requirements: Annual business revenue of $60,000
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How can I finance the purchase of a gas station?

Buying a gas station can be costly. If you need help financing your purchase, you’ll need to apply for a business loan. You can find business loans from a variety of lender types — including online, bank, credit union and alternative lenders. It’s worth shopping around to find the lender and loan that meets your needs.

To qualify for a loan, you’ll need to provide business account balance sheets and profit statements for the gas station to demonstrate its current financial position. The lender will also consider your own personal finances and any previous industry experience you have before approving or denying your loan.

Business loans to consider when buying a gas station

Some lenders, such as Ondeck, will not approve loans for gas stations with no convenience store attached. Before applying for a business loan (especially if your gas station is standalone), consider contacting a lender to make sure your business is eligible.

Name Product Interest Rate Min. Loan Amount Max. Loan Amount Loan Term Minimum Revenue Min. Credit Score Filter Values
SharpShooter Funding Business Loan
5.49% - 22.79%
$1,000
$300,000
6 months - 5 years
$5,000 /month
450
SharpShooter Funding offers loans up to $300,000 for small business owners who have been business for at least 100 days and can show a minimum of $5,000 in monthly deposits ($60,000/year).
OnDeck Business Loan
8.00% – 29.00%
$5,000
$300,000
6 - 18 months
$10,000 /month
600
OnDeck offers loans up to $300,000 for small business owners working in approved industries who have been in business for at least 6 months with a minimum monthly revenue of $10,000.
Lending Loop Business Loan
4.96% - 26.50%
$1,000
$500,000
3 months - 5 years
$100,000 /year
600
Lending Loop offers personalized loans up to $500,000 for small business owners who have been in business for at least one year and can show an annual revenue of at least $100,000.
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Representative example: Jae-Sang buys a gas station

Jae-Sang, a resident of BC, wants to own his own business. He sees an opportunity to take over a gas station just off a nearby highway and speaks to the current owner to find out the asking price. The owner agrees to sell him the entire business for $2.3 million. After withdrawing some of his savings and securing funds from a business partner, Jae-Sang finds himself $300,000.00 short of the money he needs.

He applies for a business loan from an online lender, and, thanks to his solid credit score, Jae-Sang is approved. He and the former gas station owner forfeit the collection and remittance of sales tax on the transaction by signing Form GST44, which can be done because both parties are GST/HST registrants. Had they not signed this form, Jae-Sang would’ve had to pay around 12% GST/PST on the fair market value of the business’s taxable assets. In that case, he could’ve treated the GST as tax deductible on his next business tax return.

Cost of purchasing a gas station$2,300,000.00
Loan typeBusiness loan (term loan)
Loan amount$300,000.00
Interest rate (APR)8.59%
Loan term7 years
Additional feesOrigination fee of 3.00% ($9,000.00)
Application fee of $0.00 (waived by lender)
Monthly payment$4,764.53
Total loan cost$400,220.52

*The information in this example, including rates, fees and terms, is provided as a representative transaction. The actual cost of the product may vary depending on the retailer, the product specs and other factors.

How much will a gas station cost?

Every gas station comes with a unique set of expenses and assets, and costs can vary depending on the size and location of the business. You can choose to rent the land its on or buy it outright, which impacts the final cost. Business-specific factors, like electronic doors and security systems, will also impact how much you’ll pay. Gas stations could cost over $1 million to purchase.

Have the business professionally evaluated before you buy, and make sure your assessment includes the following:

  • Previous years’ financial statements
  • Physical assets like machinery, buildings, equipment and stock
  • Registration papers and permits
  • Property lease, if applicable
  • Market conditions, including competition in the local area
  • Sales reports and forecasts
  • Business plan for future growth
  • Employee skills, experience and pay rates
  • Supplier details and arrangements

While you may consider trying to calculate the value of a business yourself, this is a task that’s usually best left to an expert. An accountant or business adviser can help you analyze both your own finances and the value of any business you’re considering buying. They can also examine market trends to help you work out a fair price for the gas station.

What are the ongoing costs of ownership?

Running a business takes time and money, but can be an investment for years to come. You’ll not only have to factor in the changing price of gas, but also the costs of running an attached convenience store. After all, most of your money will be made inside the store – not at the pump. Success comes from good retail management, which means scheduling regular shifts, hours and inventory.

Large, clean stores attract customers, but so do low prices at the pump. In fact, many experts in the industry state that low market prices will have a positive impact on your profit margin, which is often around 2%.

Your basic costs will largely depend on the following factors:

  • Employee wages
  • Refilling the tanks
  • Ordering store items
  • Store maintenance

Generally speaking, gas station monthly operating costs range between $10,000 and $20,000.

What else should I consider when buying a gas station?

Gas stations require a lot of hands-on work to function successfully. You should keep the following factors in mind when assessing whether or not you want to buy a gas station.

  • Choosing a franchise. Many of the big-name companies offer franchise options for independent owners. While the franchisor covers you if any laws change or your tanks break, you’ll be limited to its gas selection and may face steep increases in rent as well as competition from other franchisees.
  • Going independent. If you don’t want to join with a major brand, consider buying an independent gas station. While this means you don’t have to answer to a major conglomerate, it also means you don’t get the support with marketing and running your business that you could expect from a major brand. In addition, many customers buy gas from specific brands of stations in order to reap the rewards of loyalty programs – which could majorly affect your sales as an independent business.
  • Your experience. Lenders want to know your business will be successful, and that means demonstrating you know how to run a gas station — or at least know how to manage retail. It will be much harder to find financing if you don’t have past experience.
  • Location, location, location. The location of a gas station and the traffic that passes by are crucial to its financial success. A gas station located on a main road or off a highway will likely have more business than one out in the countryside.
  • The competition. While location is critical, gas stations in prime locations will usually have plenty of direct competition nearby. This can have a huge impact on profitability and is another factor lenders consider when assessing your application.
  • Financial position. You’ll need to take a close look at the financial position of the gas station to determine whether it represents a viable purchase and can continue providing a profit. Have a third-party inspector come in to evaluate the business and the physical condition of the store, fixtures and pumps.

Bottom line

Although gas stations tend to have thin profit margins, they are a fairly stable business with predictable revenue. If you find a good deal and have the capital to invest, a gas station can be a great way to own your own business and run an intimate store with plenty of potential customers. If you’re looking for financing, compare your business loan options before applying to make sure you find the best fit for your needs.

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