SBA Loan for a Gas Station - Ultimate Guide

August 31, 2023

Adam Hoeksema

There are roughly 140,000 gas stations in the United States and roughly 10,750 of those gas stations are operating as a sole proprietorship.  Although gas station profit margins are just 1%, they can still be a profitable business to start or acquire.  

I spent 10+ years as an SBA Lender in the Midwest where we approved nearly 2,000 loans during my time there.  Based on my experience in SBA lending and all of the clients that we help create financial projections for their business here at ProjectionHub, I wanted to write a comprehensive guide to SBA loans for gas stations specifically.  

Here is what I plan to cover:

With that as our guide, let’s dive in!

Top SBA Lenders for Gas Station Businesses

Celtic Bank Corporation stands out as the leading SBA lender for Gas Station Businesses, having approved 130 SBA loans over the past six years with an average loan amount of approximately $1.9 million. Below, you'll find the top 10 SBA lenders in the Gas Station industry based on data from 2018 to 2023.

Lender # of Loans Approved Average Loan Amount
Celtic Bank Corporation 130 $1,879,114
Commonwealth Business Bank 110 $1,598,155
Wallis Bank 89 $1,638,498
First IC Bank 82 $1,588,567
PCB Bank 82 $1,892,439
Open Bank 75 $1,827,487
Byline Bank 66 $1,265,652
Readycap Lending, LLC 65 $1,873,183
Citizens Bank 58 $1,276,093
TD Bank, National Association 41 $321,480

Top SBA Lenders to Finance a Gas Station Acquisition

For acquiring a gas station with an SBA loan, Metro City Bank takes the lead among SBA acquisition lenders in gas station financing. They've provided 32 loans with an average size of $3.4 million between 2018 and 2023.

Lender # of Loans Approved Average Loan Amount
Celtic Bank Corporation 58 $1,998,557
First IC Bank 34 $1,787,809
Open Bank 32 $1,907,469
Commonwealth Business Bank 29 $1,572,586
UniBank 26 $2,364,231
Hanmi Bank 24 $1,602,767
Citizens Bank 23 $1,256,030
PCB Bank 23 $1,890,217
Byline Bank 19 $1,432,737
Bank of Hope 14 $2,496,321

Top SBA Lenders for a Gas Station Startup

When it comes to financing gas station startups, the top SBA lender over the last six years has been Wallis Bank. Wallis Bank has approved 21 loans for gas station startups, with an average loan amount of $2,546,967 between 2018 and 2023. Below, you'll find the top 10 SBA lenders for financing gas station startups.

Lender # of Loans Approved Average Loan Amount
Wallis Bank 21 $2,546,967
Celtic Bank Corporation 13 $2,931,777
Cadence Bank 9 $1,426,767
Georgia's Own Credit Union 8 $1,557,188
The MINT National Bank 8 $1,344,375
Commonwealth Business Bank 8 $3,240,750
Byline Bank 7 $1,947,571
Cornerstone Bank 6 $338,667
The Huntington National Bank 6 $606,183
Citizens Bank 6 $1,608,367

Resource: Find an SBA Lender that is the perfect fit for your situation

What is an SBA Loan?

An SBA (Small Business Administration) loan is a type of loan designed to assist and support the growth of small businesses in the United States. The U.S. Small Business Administration doesn't actually lend money directly to entrepreneurs; instead, it sets the guidelines for loans made by its partnering lenders (like banks and credit institutions). The SBA helps ensure these loans, making them more attractive to lenders, as there's less risk involved.

In the context of a gas station business:

  1. Startup or Expansion: Entrepreneurs looking to start or expand a gas station can use SBA loans as a source of financing. The funds can be used to buy land, construct the station, purchase equipment, or as working capital.
  2. Types of SBA Loans: There are different types of SBA loan programs, but some of the most popular ones are:

a. 7(a) Loan Program: This is the most common. It can be used for many purposes including starting, buying, or expanding a business.

b. CDC/504 Loan Program: This is meant for major fixed assets like real estate or equipment. For a gas station, this could be useful for buying the land or major equipment.

c. Microloan Program: For very small loan amounts, which might be used for startup costs or minor renovations.

Resource:  Learn how to get an SBA microloan from my experience approving over 1,000 SBA microloans. 

  1. Favorable Terms: SBA loans often come with favorable terms such as lower interest rates, longer repayment periods, and lower down payment requirements. This can be very helpful for a capital-intensive business like a gas station.
  2. Eligibility and Requirements: Not every business is eligible for an SBA loan. There are specific size standards, demonstrated need, and other criteria. The gas station business owner would need a solid business plan, good credit, and sometimes collateral.
  3. Consideration of Environmental Issues: Gas stations are considered an environmentally sensitive business because of the fuel storage and potential for spills. Lenders, in line with SBA guidelines, might require an environmental investigation of the property before approving a loan. This ensures that there aren’t any existing environmental liabilities.

For someone looking to start or expand a gas station business, an SBA loan could be an attractive financing option. However, like any loan, there are obligations and potential risks, so it's essential to fully understand the terms and ensure that the business can handle the debt service.

Can I Get an SBA Loan for a Gas Station?

Yes, you can obtain an SBA loan for a gas station, but there are several factors and steps to consider:

  1. Eligibility: Ensure that you meet the basic eligibility requirements for an SBA loan:
  1. The business must operate for profit.
  2. It should be small by SBA standards.
  3. It should do business (or plan to) in the U.S. or its territories.
  4. The owner should have invested equity into the business.
  5. The business can't have other financing options available on reasonable terms.
  1. Business Plan: A comprehensive business plan is crucial. This should detail how the gas station will operate, financial projections, market analysis, competitive landscape, your experience in the industry, and how the loan will be used.

Free Resource:  Gas Station Business Plan Template

  1. Environmental Considerations: As mentioned previously, gas stations are considered environmentally sensitive businesses. You may need an environmental assessment to ensure the property doesn't have environmental issues. Some lenders might require Phase I or Phase II Environmental Site Assessments.
  2. Down Payment: While SBA loans often require smaller down payments than conventional loans, you still typically need a down payment. For a business acquisition, this can range from 10% to 25% or more.
  3. Creditworthiness: You (and other principal owners) should have a good personal credit score. Lenders will also consider your experience in the industry and the financial health of the existing business if you're buying one.
  4. Collateral: Depending on the size and type of the loan, the lender might require collateral, which could include business assets, real estate, or other valuable property.
  5. Types of SBA Loans: Depending on your needs, you might apply for a 7(a) loan (most common and versatile), a 504 loan (for major fixed assets like land or equipment), or a microloan (for smaller amounts).
  6. Find a Lender: Not all banks or lending institutions participate in SBA lending. Research lenders in your area who have experience with SBA loans and, preferably, with gas stations.
  7. Loan Application: Once you've identified a lender, you'll fill out an application and provide required documentation. This can include your business plan, personal and business financial statements, tax returns, and other pertinent information.
  8. Interest Rates and Terms: SBA loans often have favorable interest rates because they are partially guaranteed by the government. However, rates can vary based on the loan size, maturity, and the current market.
  9. Approval Time: The time it takes to get approval can vary widely. If everything is in order, some loans might be approved in a matter of weeks, while others, especially larger or more complicated deals, might take months.

While SBA loans can be a great option for financing a gas station, it's essential to understand all the requirements and obligations. Consulting with financial advisors or professionals experienced in the SBA lending process can help guide you through the process.

Why an SBA Loan is a Good Option for a Gas Station

Obtaining an SBA loan for a gas station can be a beneficial move for several reasons:

  1. Lower Down Payments: Traditional business loans often require larger down payments, sometimes as high as 20-30% of the loan amount. SBA loans, on the other hand, can have lower down payment requirements, making it more feasible for entrepreneurs to secure the financing they need.
  2. Favorable Interest Rates: SBA loans typically come with competitive interest rates, often lower than those of conventional loans. This is because the U.S. government partially backs SBA loans, reducing the risk for lenders.
  3. Longer Repayment Terms: SBA loans can offer longer repayment terms than traditional loans. For instance, for real estate, the term can be up to 25 years, and for equipment or working capital, it can be up to 10 years. This reduces the monthly burden on the business, improving cash flow and making management more straightforward.
  4. Increased Access to Capital: For industries or business types deemed riskier by traditional banks (like gas stations due to environmental concerns), SBA-backed loans can be a means to access capital when other avenues are closed.
  5. Flexible Use of Funds: Proceeds from SBA loans can be used for a variety of purposes, including purchasing land or equipment, constructing or renovating facilities, providing working capital, or refinancing existing debt.
  6. Support and Resources: The SBA provides more than just loans. They offer a range of resources and guidance to help entrepreneurs succeed, from business planning to marketing strategies.
  7. Potential for Lower Collateral Requirements: While collateral is often required, the SBA might be more flexible than traditional lenders in what they consider acceptable collateral.
  8. Build Business Credit: Successfully repaying an SBA loan can help a business build its credit profile, making it easier to obtain other types of financing in the future.
  9. Environmental Assessment Assistance: Given that gas stations have environmental concerns due to underground storage tanks and potential contamination, lenders may require environmental assessments. With SBA loans, there's a clear framework on what type of environmental reports are needed based on the loan size and property usage, streamlining the process.

SBA Loan Application Process for a Gas Station

Applying for an SBA loan for a gas station involves a series of steps, many of which are standard for any small business, though some might be specific to the nature of gas stations (especially concerning environmental concerns). Here's a general outline of the process:

  1. Self-assessment and Preparation: Before diving into the application process, evaluate whether your business and personal financial situations are conducive to getting approved. This includes your credit score, past financial performance, and the viability of your business or business plan.
  2. Select the Right SBA Loan Program: The SBA offers several loan programs. The 7(a) loan program is the most popular and versatile, but there is also the CDC/504 program (focused on real estate and equipment) and the Microloan program.
  3. Develop a Comprehensive Business Plan: Your business plan should detail how the gas station will operate, provide gas station financial projections, a market analysis, a competitive landscape, your experience in the industry, and how the loan will be used.
  4. Gather Documentation: You'll need to provide a variety of documents, including:
  1. Personal and business tax returns.
  2. Personal and business financial statements.
  3. Profit and loss statements.
  4. A list of business debts.
  5. Legal documents like business licenses, franchise agreements, or lease agreements.
  1. Environmental Assessment: Given that gas stations have potential environmental risks due to factors like underground storage tanks, lenders may require an environmental assessment. Depending on the size and type of the loan and property's history, this can range from a simple questionnaire to more detailed Phase I or Phase II Environmental Site Assessments.
  2. Choose a Lender: Not all banks and financial institutions offer SBA loans. It's a good idea to work with a lender experienced in SBA loans and, preferably, one familiar with gas station businesses.
  3. Complete the Loan Application: Your chosen lender will guide you through their specific application process. In addition to the documentation mentioned above, you'll fill out the necessary SBA forms. This might include:
  1. SBA Form 1919: Borrower Information Form.
  2. SBA Form 912: Statement of Personal History (for background checks).
  1. Underwriting: Once you've submitted your application, the lender will review all your documentation, assess the viability and risk of your business, and make sure all SBA requirements are met.
  2. Loan Approval and Terms Negotiation: If your application passes the underwriting process, the lender will propose loan terms, including interest rate, repayment schedule, and any other conditions.
  3. Closing: Once terms are agreed upon, you'll enter the closing process, which involves finalizing all documentation and setting up the loan's disbursement. Depending on the use, the funds might be given as a lump sum or in stages.

I hope this post has been helpful as you consider the pros and cons of an SBA loan and what the process would look like to apply for a loan.  If you have any questions along the way please don’t hesitate to reach out! 

About the Author

Adam is the Co-founder of ProjectionHub which helps entrepreneurs create financial projections for potential investors, lenders and internal business planning. Since 2012, over 50,000 entrepreneurs from around the world have used ProjectionHub to help create financial projections.

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