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Convenience Store Financing

The US convenience store and truck stop industry generates $450 billion in annual revenue from through gas station/c-stores small businesses, as well as c-stores that don’t sell fuel. Small business research reports show average revenue for convenience stores that don’t sell gas is around $145,000 annually. Gas station/convenience store combinations have annual revenue of $450,000 per worker. C-store industry store counts has increased in each year since 2010 because of they are convenient one-stop shopping destinations with extended hours of operations.

Convenience and C-Store Industry Trends

The convenience store industry, or c-stores, is booming in 2016, however this is one of the most difficult industries to follow. Trends are constantly changing and most convenience store owners never really know what to expect. This is mainly due to the organic nature of a convenience store – a 24 hours a day, seven days a week, 1 million customers per day traffic type of industry. It is incredibly difficult to keep up with the emerging trends for the convenience store industry because they are constantly changing in a matter of weeks! However, there are some major highlights to the upcoming years that will boost revenue for the convenience store industry. That is, of course, if convenience store business owners are willing to take the necessary steps and actions to grow their business, as well as reaching the technological demands of consumers in 2016.

Convenience stores have always been important for consumers, but with the United States turning into a fast paced lifestyle country, convenience stores are becoming a necessity for all consumers. The convenience store industry is also continuing to grow because more and more American’s are becoming employed since the 2008 financial crisis. This is allowing more people to have expendable income. Since so many people today are working and living these fast paced lifestyles, having access to affordable yet quick food is vital; all of these contributing factors are only continuing to boost revenue growth in the convenience store industry. Overall, the convenience store industry has exceeded $571 billion of retail food and nonfood products, with convenience stores accounting for about over 6 percent, which is a huge percentages when taking into account grocery stores. Focusing on implementing quick and affordable food options and food services into a your convenience store business will help increase annual revenue, but affording this necessary transition can be difficult; reviewing the different types of loan options for a convenience store can help.

The convenience store industry has faced some difficult times in the past few years with the recovering economy, however more than two in three convenience store retailers claimed that in-store sales, especially through convenient food options, in the first nine months of 2016 were much higher compared to the same nine months in 2015. Now if you are a convenience store owner that is also a gas station, then your business is doing even better! Convenience store owners across the board are all feeling much more optimistic for the upcoming quarter, as well as the next few years. However, there are many important convenience industry trends that convenience store owners need to be aware of; convenience store owners that are not utilizing and implementing the new demands of consumers need to start reviewing the different convenience store financing options to help make this transition!

Main Reasons a Convenience Store or C-Store Would Need Financing?

  • Expansion financing for renovation and upscaling a convenience store is a major trend that is emerging in the convenience store industry today. Many consumers are demanding that convenience stores expand into food service and health and wellness, which is leading to convenience store retailer’s completely upscaling their convenience stores. Younger generations are wanting every store they shop at to be clean, state of the art, and up to date. In conjunction with renovations and upscaling of convenient stores, expansion is also an option for successful convenience stores, especially since the large convenience stores and gas stations are difficult to compete with. These can all be expensive ventures, however there are plenty of financing options listed below to help your convenience store thrive in this competitive and diverse market.
  • Inventory financing is a necessary expense for every convenience store owner, especially when consumers have more money to spend on miscellaneous items. Being prepared for peak seasons can also be difficult, so knowing what financing options are available to your convenience store can help you prepare for those busy seasons.
  • Growth Capital: Offering a variety of items is a necessity in today’s fast paced country. People today, especially younger generations, are eating more on the go foods and snacks; if convenience stores can afford to implement more products and services into their convenience stores, then there will be more revenue growth. Another key area that many convenience store owners are considering implementing into their convenience stores is vape, or electronic cigarette, options. As we have discussed before, the vaping industry has become incredibly profitable. Many convenience store owners in the past had no interest in entering this market, but in 2016 it can be a huge source of income. However, affording these new products can be expensive, so considering the different convenience store financing options can help a convenience store owner expand their business and customer base.
  • Working capital to help between payments. Food service that is fast and cheap but still healthy is a growing demand that every convenience store owner should consider catering to. In conjunction with offering food service though comes the issues of dealing with EBT and SNAP. (LINK3)The Small Business Administration has outlined the difficulties and current regulatory issues associated with offering these options, however many convenience stores do see a benefit to accepting these forms of payment. Reviewing the financing options available to your convenience store can help make this transition easier!
  • Payroll financing accounts for a majority of most convenience store expenses, but this is an expense that is unavoidable. Looking into the variety of convenience store financing and loan options available can help convenience store owners cover these costs during difficult times.
  • Marketing, Social media and mobile technology is essential in today’s society. Almost every single consumer today is on social media, as well as utilizing mobile payments and loyalty rewards programs. Understanding and effectively implementing social media and mobile based offers and rewards can be confusing, time consuming, and difficult. This is why many people in all industries hire other people to handle these important necessities. Many convenience store owners are seeing a major increase in demand for social media and mobile rewards programs in their convenience stores, however hiring companies to help with this transition can be expensive. This is why looking into convenience store financing and loan options can help your convenience store succeed.

Types of C-Store Loans

Types Rates Terms Funding
Bank 6-10% 3-7 years 14-30 days
SBA 6-10% 3-7 years 10-30 days
Line of Credit 5-15% 1 – 3 years 7-30 days
Alternative 6-25% 1-5 years 5-7 days
 Cash Advance 1.16-1.55 3-24 months 1-3 days

Convenience Store Bank Loans

Traditional bank convenience store loans are always the best option for any convenience store to consider. Traditional bank loans, also known as bank term loans, are a great option if your convenience store has good credit and is well established and consistent with business profits.

  • Rates: 5-10%
  • Terms: 1-25 years

SBA Loans

SBA loans are a great option for small convenience store businesses. The SBA loans provide convenience stores with affordable financing working capital, equipment leasing, refinancing and/or purchasing of property. SBA loans typically have decent rates and repayment terms, however SBA convenience store loans still require decent credit and can be a lengthy process. SBA loans provide convenience stores with affordable financing working capital, equipment leasing, refinancing and/or purchasing of property. Depending on usage, repayment terms are usually between 7-25 years. Current SBA loan rates are usually in the 6-8% range.

  • Rates: 6-8%
  • Terms: 7-25 years

Alternative Business Loans

There are plenty of convenience store owners that have good credit and solid revenue, but are just below the eligibility requirements for a traditional bank convenience store loan or a convenience store SBA loan. This is when a convenience store should consider looking into alternative business loans, otherwise known as mid prime business loans.

  • Rates: 9-20%
  • Terms: 1-5 years

Asset Based Loans

Asset based business lending for convenience stores is another viable option for those convenience store owners that do not qualify for traditional bank loans and SBA loans. Asset based lending for a convenience store is a type of commercial financing that provides funds after they are secured with assets from a convenience store.

  • Rates: 8-25%
  • Terms: 6 months – 3 years

Merchant Cash Advance

Merchant cash advances are not loans; instead, they are the sale of future bank deposits and credit card transactions for a lump sum of up front capital. Ideally a convenience store owner would prefer to try and secure a traditional bank loan, an SBA loan, or an alternative business loan before considering a merchant cash advance; however, sometimes convenience store owners find themselves needing short-term working capital immediately which is the best part of merchant cash advances for convenience stores. With the low credit requirements, a cash advance is also the best choice (or only choice) for businesses with bad credit.

  • Rates: 16-100%
  • Terms: 4 months – 2 years

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GUD Capital is a nationally recognized leader in the financing industry for providing the best business lending solutions available to small and mid-sized businesses. We leverage our network of 4,000 competing commercial lenders to provide your business the largest selection of commercial financing options.

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