Business Loans for Gas Stations: The Top Options

Updated on June 23, 2020
Advertiser Disclosure

Starting or continuing to run a gas station can be a very capital-intensive business—but you probably know that as an entrepreneur yourself. That’s why business loans for gas stations can be a huge asset for gas station proprietors; they can allow you to do things as small as patch asphalt or stock the shelves of your convenience store, or things as big as replace a pump or get a lift for the garage where you do inspections.

As you’ll learn, there are many different types of gas station financing available to entrepreneurs. What you’ll qualify for will depend on your financial history, including your credit score and how long you’ve been in business. There are also different structures to business loans for gas stations, some of which are more flexible than others, or faster to cash in hand.

Running a gas station is incredibly necessary for communities who rely on your services to get everywhere they’re going. Pairing yourself with the right business loan for your gas station can help you continue to provide the services people count on. That’s why, in this guide, we’ll lay out what you need to consider before choosing a business loan, the best business loans for gas stations, and go over how you can apply for them.

Different Types of Business Loans for Gas Stations

As you are learning about small business loans for gas stations, the first thing to understand is the different types of loans that are available to you. There are a few different facets of loans to understand—the structure, as we mentioned, but also what’s required of you to apply, how quickly you’ll receive capital, and more.

Before going any further into the business loans process, you’ll want to have a good picture of your own business’s financials. What is your credit score? How is your cash flow? How dire is your need for financing? Do you need to finance something specific, or is a large lump sum the right fit for you?

If you’re not sure of the answer to these questions, which you’ll need to have before diving deeper into business loans, you may want to reach out for help. We recommend talking to a bookkeeper, who can give you a sense of the parts of your business financials that aren’t yet crystal clear.

Business Loans for Gas Stations: Choosing the Right One

Have a good sense of your business financials? Great. Let’s go on to figuring out how to find the best gas station business loans for you.

First, let’s talk structure. Some business loans allow much more flexibility in terms of how you’re able to spend money, and deliver you a lump sum in which to do that. Others offer flexibility but they don’t deliver money in a lump sum, but rather you can borrow as you need it. Others still only let you finance specific things, such as inventory or equipment. So, get a sense of whether you’re going to be purchasing something specific with your business loan, or whether you’d like the freedom to spend as you wish.

Next, timing. Some business loans enable you access to capital very quickly—in certain cases, literally overnight—but others may take a bit more time. Most of the loans we’ll discuss today are fast-to-cash loans, but there are others, like SBA loans, which take a great deal more time. So, ask yourself how quickly you need access to your loan. It’s not only a good thing to know while evaluating your loan options, but an important thing to let anyone who is helping you get a business loan know.

Finally, repayment. Many people think that business loans have fixed, monthly payments. But that’s not the case for every business loan. Some have required repayments that are more frequent, and others don’t require you to even pay unless you’ve borrowed. Having a sense of your cash flow and what you can afford and how often will help you pick the best loan.

business loans for gas station

The Best Small Business Loans for Gas Stations

Now that we’ve gone over how to identify a strong gas station business loan option, let’s look at those options. This isn’t an exhaustive list, but we’ve chosen these types of business loans based on the unique needs of gas stations.

Best Working Capital Gas Station Loan: Term Loan

The first gas station business loan you may want to check out is a term loan. If you’ve been looking up business loans, it’s possible that this is what you have in mind: a lump sum deposited into your business bank account that you pay back over time, often monthly, with fixed payments.

This is an excellent loan for access to what’s called “working capital,” which is flexible cash that your business can spend on your company’s needs as you wish. Some use term loans for investments, and other for things like emergency repairs. There are a lot of options for how you can make this money work for you.

Applying for a term loan is generally a fairly quick and painless process, and you can often have capital in hand in a few days. And unlike SBA loans, which are considered the gold standard of business loans and are often dispensed as term loans, these kinds of business term loans have significantly less paperwork, less stringent qualification requirements, and will enable you access to capital faster.

Alternative Working Capital Gas Station Loan: Short-Term Loan

If you like the idea of a term loan, but need cash faster—or, alternatively, can’t qualify for a business term loan—you may want to look into a short-term loan

This kind of loan is very similar in structure to a medium-term loan like we mentioned before, but with two big differences: One, repayment is daily or monthly; and, two, interest rates are a bit higher. But that’s often due to the fact that requirements to qualify aren’t as strict, and you can have these loans in hand often the next business day. These loans have maximum terms of 18 months.

Best Cash Flow Gas Station Loan: Business Line of Credit

If you like the flexible working capital approach of a term loan, but think a different structure could be right for you, then you’ll want to consider a business line of credit. You’ll apply for a business line of credit just like other business loans, but instead of getting a lump sum, you’ll be approved for a credit line that you can borrow up to the top of. 

The biggest benefit of these loans is that if you don’t need all of the money that you’re approved for, you don’t have to borrow it—which means that you also don’t have to pay interest on it. In other words, only pay interest on what you borrow. This can help your business save money. 

This loan is particularly good for cash flow; if you need to pay your employees, pay for supplies, pay for utilities, etc.

A business line of credit is often available to newer businesses—sometimes as young as six months. Note that you’ll need to have good credit history personally if you don’t have a big record of your business financials.

business loans for gas station

Best Equipment Gas Station Loan: Equipment Financing

As you very well know, one of the biggest expenses in owning a gas station is equipment—and if your pumps go down, or you can no longer inspect cars due to a failure in your gear, your business may very well suffer.[1] 

Equipment financing helps entrepreneurs gain access to loans for equipment specifically. You’ll bring a quote to a lender, which will finance you for up to 100% of the equipment. The loan then lasts the life of the equipment. Equipment loans are different from equipment leasing, since you’ll own the gear outright.

Although this setup may seem simplistic, it’s actually very clever—especially because of something called “self-collateralization.” This means that the equipment that you purchase serves as collateral for the loan itself, and, often, you don’t need to provide any additional assets to secure it. This also helps businesses who aren’t as established gain access to the capital they need to make major purchases.

Alternative Approach: 0% Introductory APR Business Credit Card

 You may not think of a business credit card as a business loan option for gas stations, but if you are savvy about your usage, you can get a lot of mileage out of a card. For financing options, look into a 0% introductory APR business credit card particularly. With these cards, you have a long interest-free period during which you can make purchases and not have to pay interest if you don’t pay your balance in full—however, after your interest-free months are up, a variable APR will set in at a rate that will vary with the market prime rate, so be sure to read the terms and conditions before signing up for one.

If you’re smart about making a payment schedule to pay off your full balance before the 0% APR period ends, you can get a lot of return out of this kind of gas station financing. You can even earn benefits like cash back or rewards as you spend.

How to Apply for Business Loans for Gas Stations

Once you’ve decided which business loan you’re targeting, you’ll work with a lender to gain approval. There are very specific things that lenders look for and specific documents they request. These vary on a lender-to-lender basis, but they’re often similar. If you’re hoping to get your hands on capital quickly, the more you can prepare for your application in advance, the faster you’re likely to get your money if you’re qualified.

Documents you’ll want to pull include the following:

  • Personal identification
  • Three months of recent business bank statements
  • Two years of business and personal tax returns
  • Profit and loss statement

You will also need to at least have an idea of your credit score. Although a lender will pull this on their side to verify—what’s called a “hard pull”—having a sense of where you fall on the spectrum will help you expect whether or not they’ll find you qualified, and give you a sense before that of which loans are realistic for you to apply to.

Finding the Best Business Loans for Gas Stations

That’s a lot of information—we know. But hopefully, you’ll feel encouraged that there are many options for gas station business loans, no matter what your needs are. Remember that doing the work to pick the best business loan for gas stations isn’t just reading through a list, but really doing the work to understand what’s going to work for your specific business. Finding the correct business loan can help you so much, and even save you money over time.

Article Sources:

  1. Jshield.com. “Evaluating Equipment Replacement Costs for Gas Station Losses
Vice President and Founding Editor at Fundera

Meredith Wood

Meredith Wood is the founding editor of the Fundera Ledger and a vice president at Fundera. She launched the Fundera Ledger in 2014 and has specialized in financial advice for small business owners for almost a decade. Meredith is frequently sought out for her expertise in small business lending. She is a monthly columnist for AllBusiness, and her advice has appeared in the SBA, SCORE, Yahoo, Amex OPEN Forum, Fox Business, American Banker, Small Business Trends, MyCorporation, Small Biz Daily, StartupNation, and more. Email: meredith@fundera.com.
Read more