How to Buy a Gas Station with an SBA Loan

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How to Buy a Gas Station with an SBA Loan

Due diligence and financing a gas station / convenience store with an SBA 7(a) small business loan.

Buying a gas station can be a great investment but finding the right location, deciding on franchised or independent options, and obtaining financing can be complicated. Here’s a quick how-to guide.

Gas Station financing options. First, determine the price range you can afford so you can narrow your search. If you are planning to use an SBA loan to buy a gas station, please use our popular Total Funding Calculator to determine how much you can afford using cash, retirement funds (401k or ROBS), home equity line of credit (HELOC), gifts and other down payment sources. That calculator is available here.

For a complete lending scenario including possible down payment requirements and “seller participation” scenarios, use our Complete SBA Loan Calculator for an incredibly useful overall lending projection. This calculator is available here.

Plan to contribute no less than 10% of the total purchase price as a down payment.

You can add some working capital into your project for inventory, improvements, personnel, and addition of ancillary services such as convenience stores, car washes, repair centers.


  • Straightforward business model
  • Relatively low-tech
  • Management and technology (cameras) allow for absentee owners
  • Stable revenue (through economic downtimes and seasons)
  • Electric cars will need charging stations
  • Driverless cars will need servicing and fuel
  • Can add many sources of revenue: convenience store, car wash, auto repair center, in-store restaurant, lottery tickets, newspapers and magazines, fax service, photocopying, coffee, and tobacco and alcohol
  • Large amounts of cash sales (good cash flow)

If you are using a loan to buy a gas station, make sure the cash flow of the gas station can pay the loan payments and a salary for you as owner.

Conventional loans to buy a gas station are also an option but can be harder to qualify for, have higher down payment requirements and shorter loan terms, often involve balloon payments, and do not allow for working capital.

You should get pre-qualified ahead of time to begin discussions, estimate your borrowing limit and loan terms, and get a pre-qualification letter to help with your negotiations.


  • Roadwork can interfere with business
  • Need to keep pumps, coolers, and other equipment up to date
  • Long hours
  • Volatile gas prices
  • Electric cars and uncertainty regarding gasoline and oil industry
  • Driverless cars could reduce sales of convenience store items, lottery tickets, and tobacco and alcohol products
  • Inventory requires a lot of capital and may include perishable items
  • Environmental and toxic concerns (especially if you own the real estate and not part of a franchise)
  • Large amounts of cash sales can make determining cash flow difficult for you and lender

You can get pre-qualified within 36 hours, with no credit check required here.

Visit the gas station at various times. You’ll want to get a good idea of the business at multiple times throughout the day. Does rush hour traffic prevent people from getting to your gas station? Does the area get dangerous at night?

While you are there, you should note the staff and management in place, friendliness, service, cleanliness, perceived safety (lighting and security cameras), presence or absence of canopies, and quality of the furniture, fixtures, and equipment. A lack of quality in certain areas can argue for a lower purchase price and can also provide you with opportunities for growth and improvement.

Location, Location, Location. The location of a gas station can have a huge impact on the future performance. Be sure to keep these ideas in mind:

  • Visibility: Is the gas station easily visible from the street or highway?
  • Accessibility: Is the gas station easy to pull into and out of? Is there enough parking?
  • Nearby foot traffic: How close is the gas station to foot traffic such as malls, dining, entertainment, office districts, and airports?
  • Market conditions: Is the population growing? Is anything under development that would increase traffic?
  • Competition: How many other gas stations are nearby? How will your gas station differentiate itself?

Barriers to entry: Is there anything stopping future competition? Some barriers to entry can include lack of reasonably priced land and lack of appropriately zoned land.

A pre-qualification is a great way to get a headstart on your application and will help in your negotiations. There is no credit check required and you’ll receive your pre-qualification letter and borrowing estimate within 24 hours.

Consider the brand of the gas station. Are you looking at buying a franchise gas station or an independent gas station?

A franchise handles environmental issues and provides marketing and advertising, name recognition, training, loyalty programs, and construction and renovation guidance, but you’ll be required to follow the franchise policies and pay franchise fees.

An independent gas station can be less expensive, offers more freedom and negotiating power with gasoline distributors and other vendors, allows the owner to add whatever ancillary services and products he/she desires, and will not require franchise fees paid to the franchisor, but will expose the owner to the costs and management of potential environmental issues. In general, a franchise gas station will have a better chance of obtaining financing.

Think about additional sources of revenue. Ancillary services and products provide additional sources of revenue. If the gas station is lacking any services, it may be an opportunity for you to take advantage of. Think about adding a convenience store, car wash, auto repair center, in-store restaurant, lottery tickets, newspapers and magazines, fax service, photocopying, coffee, and tobacco and alcohol.

Review the documents. There are a number of documents to review when buying a gas station:

  • Tax returns: last 3-5 years
  • Interim income statement: year-to-date and comparison to previous year
  • Interim balance sheet: year-to-date and comparison to previous year
  • List of inventory and furniture, fixtures, and equipment
  • List of employees with name, position, start date, salary, and benefits
  • Details of litigation threatened, pending, or taken
  • Inspection reports such as building and health inspections
  • Franchise agreement
  • Fuel supplier agreement
  • Lease agreement: How long is the lease? Are there restrictions that might prevent you from expanding products or services?
  • Business valuation or appraisal
  • Environmental studies
  • Warranties
  • Service contracts
  • Other licenses, permits, and contracts: i.e. liquor license, lottery license, vendor contracts, relationship agreements, supplier agreements, etc. What is the process of getting these transferred to you and how long will it take?

If you are using an SBA loan to buy a liquor store, you can include working and operating capital in the loan. Get your same-day pre-qualification with no credit check required here.

5) Understand licensing and regulation

Individual cities, counties, and states can have different regulations regarding liquor stores. This is great for small businesses because it prevents major national chains from forming; however, you must do your research to understand the rules for change in ownership and compliance after ownership for each individual location.

The Alcohol and Tobacco Trade and Tax Bureau (TBB) and state and local authorities can be great resources for this and should be used to verify information from the seller or seller’s broker.

6) It may require more involvement than you think

Liquor stores are stable investments and are less prone to economic downturns than other retail businesses. During economic hardships, alcohol consumption shifts from pricier bar and restaurant options toward retail purchase for home consumption.

Although liquor stores can be a good investment, they may be better suited for owner-operated than absentee-run businesses. It will be up to you as owner to make sure you are constantly monitoring the latest industry trends and offering what the consumer wants.

In addition, there is a lot of cash and inventory that must be carefully monitored because it is susceptible to stealing by shoppers and employees.

Overall, you’ll need a very generalized knowledge of business and will have to handle accounting, marketing, sales, operations, employment management, and customer service.

7) Don’t pay for cash flow that cannot be documented

Since liquor stores involve a lot of cash sales, many of them have poor books and records. Don’t just take a seller’s word for what they verbally report for business revenue – if they can’t prove it, they can’t charge you for it.


Buying a liquor store can provide a stable investment but may be better suited as an owner-operated business as you will need to take care of industry trends and inventory. Using an SBA loan to buy a liquor store allows you to leverage your money and provides for working capital for inventory, marketing, payroll, and improvements.


The best online SBA loan platform is YourEdge™ by

  • Get prequalified to buy a business within 24 hours
  • Start here with YourEdge™
  • Find out how much you may qualify for using our SBA Loan Calculator tools here.
  • Business acquisition loans from $350,000 to over $5 million.
  • 5x success rate of your bank
  • No fees
  • No credit check / No hard credit pull
  • No bank runaround
  • Online, streamlined application accepted by all of the most aggressive SBA lenders for competitive interest rates and a 95% success rate.
See if you qualify for an SBA loan by taking just a few minutes to complete the quick form here. The pre-approval process takes less than one day and does not require a hard credit pull.