Financing gas stations is difficult, complicated, and therefore most conventional banks and lenders do not consider financing a gas station or convenience store. Why?

1) Gas stations, convenience stores, and the car wash business are a “cash business” and no business owner would report cash on tax returns. Therefore, it is impossible to check the cash flow and determine the debt / service ratio of the loan.

2) The properties of gas stations have environmental risks. Those that are clean have a higher risk of environmental problems in the future.

3) If lenders seize gas station property through foreclosure, they cannot run the business. Unlike income-generating properties such as apartment buildings, lenders cannot get a property manager to manage the gas station.

4) There are other issues such as low fuel margins, restricted dealer or franchise agreement that make the lender uncomfortable when evaluating gas station financing.

Few lenders would consider financing gas stations, and the majority use SBA loans to finance the property, as the federal government guarantees the majority of the loan. Even with the government guarantee, the lenders are very conservative in underwriting the transaction. To be honest with you, if you’ve found a gas station property to buy, financing is possible, but it would be a hassle, so be prepared.

There are lenders who specialize in financing gas stations and convenience stores. [http://easysbaloan.com/small-business-loan-programs/special-purpose-lending/convenient-store-commercial-property-loans-financing/].

Some would go up to an 80% loan on the property’s value and use the real estate, business, and equipment as collateral to underwrite the property. The insurer examines the tax returns, income and credit statements and the experience of the backers to analyze the creditworthiness of the transaction.