Whether you’re currently operating or planning to start up a gas station, a business loan can help finance everyday expenses, a brand new gas station, or expand your business. We’ve evaluated the best gas station loans based on loan terms, fees, rates, customer satisfaction, and overall quality.
If you require cash due to a cash flow shortfall or have a less than perfect credit score, American Express Business Blueprint™ could be a promising option.
Fundera does not lend money directly but offers a digital marketplace where you can connect with lenders to provide a financing solution for your business.
National Funding offers small businesses working capital and equipment financing loans that are suitable for a broad range of businesses, and you could receive approval and funding within 24 hours.
Gas station loans are specialized finance products that provide financing to gas stations, convenience stores, and other fuel dispensers. It can be used to fund equipment purchases, such as pumps, tanks, expand operations, or other fuel dispensing hardware.
These loans work much like any other type of loan. You must complete an application, providing documentation of your financial situation and business plan. Once approved, you will receive a lump sum or money that you can access as needed. It’ll depend on the loan you select.
What are the requirements for a gas station loan?
Gas station loans requirements vary from lender to lender, but here are the common ones:
Credit scores and history: When applying for any type of loan, you must have good credit. Applying for a gas station loan will not be an exception to this rule. The lender will look at your personal and business credit history to determine whether they should lend you money or not.
Income: You will need to make sure that you have enough income coming in each month to pay off the monthly payments as well as all other expenses associated with running your business, such as employees’ salaries and maintenance costs.
Debt-to-income ratio: The lender will look at your monthly income and expenses, including your rent or mortgage payment, and compare them to your proposed loan amount. You may be eligible for a loan if you have enough income to cover your expenses plus the new payments.
Assets and collateral: The lender may also consider whether you have assets that could be used to pay off the debt if you default on the loan. For example, suppose you own an automobile or other valuable property that can be sold quickly to raise cash. In that case, the lender may offer a lower interest rate on a gas station loan than someone without those assets.
What are the types of gas station loans?
The most common types of gas station loans include:
Term loans: Term loans are the most common type of gas station loan. The borrower receives an amount of money for a fixed period, usually one to five years. The borrower pays back the principal and interest in monthly installments over the loan term.
Business lines of credit: Business lines of credit allow businesses to borrow as much as they need based on the approved amount. This type of loan has no set payment schedule or term length, so it can be used for any purpose at any time. You’ll have access to the money as needed.
SBA loans: SBA loans are made available by the Small Business Administration (SBA) to small businesses that cannot obtain financing from traditional lending sources because they lack adequate collateral or have a poor credit history.
Equipment financing: Equipment loans are typically used to purchase equipment such as pumps, dispensers, and other equipment needed for gas stations.
What are the benefits of getting a gas station loan?
The following are some of the benefits of getting a gas station loan:
Fast approval times: Gas stations can be challenging to finance because they require a large amount of upfront capital and can be difficult to sell in the future if needed. However, some lenders specialize in lending money for gas stations and can approve applications within days or hours instead of weeks or months as other lenders might take.
Tax benefits: You can earn tax benefits from your state and federal governments. The amount of tax deduction depends on how much money is spent on interest, equipment, labor costs, and other expenses related to running a gas station.
Build credit history: If you don’t have much credit history or have had trouble with past payment obligations, getting a small business loan may help build your credit, so other lenders will want to lend to you in the future.
How can you use a gas station loan to grow your business?
Here are a few ways you can use your gas station loan:
Afford day-to-day expenses: Gas station owners are often pressed for cash during slow periods. A small business loan can help you manage your day-to-day expenses without using credit cards or personal loans if you find yourself in a bind.
Purchase inventory: If you’re looking to add new products to your gas station’s inventory, a small business loan can help you purchase the items you want at a low-interest rate, so you can pay them off slowly over time.
Expand your gas station: As your business grows, so does its need for capital investment. You may want to expand your gas station by building an additional gas pump, adding a convenience store, or even expanding into another city or state with multiple stations. These investments require significant capital, which is why many entrepreneurs use a small business loan for expansion purposes.
Renovate your gas station: f you want to make changes to the inside or outside of your business, this can be done with a loan. You will need to talk to your lender about what they will allow and not allow with their financing.
Upgrade business equipment: You may have old equipment that needs replacing or upgrading. You can get new equipment for your business and keep it up-to-date with current technology.
How to choose the best gas station loans
If you’re looking for a loan to fund your gas station business venture, here are some factors to consider to choose the best one:
Identify the use of loan: Before deciding to apply for a gas station loan, you must determine how you will use the money. If you are planning to open a business, you must research how to start a new business.
Be aware of the processing time: The processing time of a gas station loan can vary depending on the amount and type of loan. Some lenders have long processing times while others have short ones.
Customer service: You want a lender who will answer phone calls and emails quickly and get your paperwork processed efficiently.
Competitive interest rates: If you’re looking for a lower rate, it may be worth shopping around at different lenders.
Flexible repayment schedules: Gas station loans are often used for short-term purposes — usually between six months and two years. Just keep to note that a longer term will be less stressful on your cash flow since payments are stretched, but the overall interest you pay will be higher. This is the opposite for shorter terms.
