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Gas Station Loans & Service Station Financing

Loans For Gas Stations

According to the U.S Bureau of Labor Statistics there are roughly 115,000 gas stations in the U.S. representing representing nearly $250 Billion in revenue. Understanding how important gas stations are for the overall economy (especially since gas stations employ nearly 750,000 employees) its important for gas station owners to know what their financing options are. Because of the nature of the business, gas stations often need financing to help with financing their day-to-day operations. Some uses for the financing include purchasing real estate, capital expenditures, paying suppliers, working capital, among other needs (including transitioning to an alternative fuel station.

Industry Analysis

Almost every person in the United States today relies heavily on the gas station industry, even when gas prices rise – it is an unavoidable necessity in a country that is designed for the use of cars and public transportation. The gas station industry has seen drastic changes since the first purpose built gas station – the year 2013 marked the 100th anniversary for all of those history buffs out there! The gas station industry has seen many positive changes since the 2008 financial crisis with many American’s going back to work, resulting in more total vehicle miles which ultimately leads to more purchases of gasoline. While there is a decline in the amount of people owning and buying cars for personal use, growing trends like Uber are being utilized more – and Uber drivers need gas too! Unfortunately, there has been a decent amount of volatility over the past five years towards the gas station industry. This is predominately due to the fluctuating costs of the prices of gas, however we are seeing today that the volume sales of gasoline are expected to decrease in the upcoming year.

While there are always ups and downs with any industry, the gas station industry continues to grow and flourish even when times are tough. As of 2016, there are over 121,446 gas stations in the United States alone, leading to over $106 billion annually of incoming revenue. Many of these profitable gas stations are also connected with convenience stores, allowing these already successful gas station businesses to become even more profitable; this has resulted in an extremely competitive and diverse industry. While there are no major companies that dominate the gas station industry, the top fifty companies do generate around 55 percent of the annual revenue in the gas station industry. The gas station industry will continue to fluctuate in the upcoming years, but gas stations are a necessity in the United States today so we will not be seeing many gas stations going out of business any time soon. However, there are always tough times with unexpected emergencies, which is why reviewing the variety of financing options listed below can help your gas station run smoothly during those unexpected times; traditional gas station bank loans, gas station SBA loans, alternative financing options (such as mid prime gas station loans), and even merchant cash advances for gas stations are all useful options.

Reasons For Financing a Gas Station

  • Payroll is the number one expense in the gas station industry, resulting in a majority of revenue being allocated for this expense. Payroll is an unavoidable cost in any business, but that does not mean that every gas station owner can afford to pay it during slow periods. Reviewing the different financing options listed below could be essential when dealing with meeting those costs.
  • Credit card and debit card fees are extremely high in the gas station industry. In 2015, the gas station industry paid over $10 billion in credit card fees, which is a slight decrease from 2014, but still extremely expensive. However, gas station owners cannot take away the option to pay with credit and debit cards because consumers demand the ability to pay for their products without cash. It is completely unavoidable in the United States today, so considering different financing options can be helpful when it comes to paying these fees.
  • Equipment is always needed in the gas station industry, but upgrading or replacing equipment can be incredibly expensive. There are many different equipment financing options available to gas stations when the time comes to replace old or broken equipment.
  • Insurance is mandatory in the gas station industry today, especially because of the amount of robberies that occur. If your gas station does not have quality insurance, you could be paying more later on when it comes to replacing items or fixing things. There are always gas station financing options available to help cover these necessary expenses.
  • Marketing, Social media, mobile gas station use, and top of the line technology are not new trends in the gas station industry, or any industry, but not every gas station owner has made the transition into these sectors. Every gas station owner needs to start making the transition into the technology generation, otherwise consumers, especially younger generations, will only deal with gas stations that meet their demands. Knowing what these new technologies are, as well as effectively implementing them into your gas station, can be confusing and complicated, so looking into companies to help you with this transition will help. As we all know though, this is not an easily affordable option, so considering financing options can be important during this transition.
  • Going green among US consumers is something that they are interested in in every aspect of their lives, so it would only make sense to assume that gas stations would be offering alternative fuels for this growing customer base. E15 and compressed natural gas (CNG) are options that every gas station owner should consider implementing into their options. In the past few years there has been a concentrated effort by the American Petroleum Institute and other groups such as AAA to stop this movement since the Environmental Protection Agency approved this fuel blend in 2001. This does not mean though that their actions have been successful, which is why every gas station owner should consider offering these types of environmentally conscious fuels. However, this is not affordable, which is why having access to financing and loans are essential in the gas station industry.
  • Expansion and renovations are always something to consider when your gas station business is profitable and doing well. Many gas stations try to open multiple locations, especially in busy cities like New York or Los Angeles, but the upfront costs of expansion for gas stations in heavily populated areas can be incredibly expensive. Reviewing the different gas station loan options below will come in handy!

Reasons For Financing a Gas Station

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
Equipment Lease 6-20% 1 – 7 years 7-30 days

Gas Station Bank Loans

Traditional bank term loans and business lines of credit are highly sought by gas station owners, because they offer fantastic rates and low fees. Banks are able to provide great rates for their small business loans because they take very limited risk. Unfortunately, a small business loan from a bank requires excellent credit as well as 3 years of trailing financials (like tax returns, income statements, balance sheets, personal financing statements, schedule of liabilities among other financial documents).

  • Bank Gas Station Loan Rates: 5-10%
  • Bank Gas Station Loan termss: 1-10 years

Gas Station SBA Loans

SBA loans offer gas station owners (especially franchises) with very affordable rates along with the most desirable terms of all commercial loans. With their low rates and extended terms, a SBA small business financing programs provide funding small business owners desire because they allow the gas station owner to service the debt comfortably with better rates and longer terms than other commercial lending options.

  • SBA Gas Station Loan Rates: 6-8%
  • SBA Gas Station Loan Terms: 5-25 years

Alternative Gas Station Loans

If you are unable to attain a traditional bank loan or SBA-enhanced small business loan because of lack of established credit low credit score or insufficient documentation, a mid prime alternative small business loan can provide a business owner the financing they need with reasonable rates. Advantages of a mid prime alternative small business loans include much faster funding (7-10 days) than traditional bank loans, higher approval rates and less documentation requirements.

  • Mid Prime Gas Station Loan Rates: 9-16%
  • Mid Prime Gas Station Loan Terms: 1-5 years

Gas Station Cash Advances

Merchant cash advance financing is not a loan, but instead a business-to-business financing arrangement where a lender will provide upfront financing in return for a percentage of the gas stations bank deposits. Repayments of a business cash advance is usually made daily through automated clearinghouse. Depending on the type of advance lender, there can be a predetermined daily payment amount, or a percentage of daily deposits. Merchant cash advance finance companies have no problem taking risk — which is why they have a very high approval rate. But, with increased risk comes higher rates.

  • Cash Advance Financing Rates: 16-100%
  • Cash Advance Gas Station Financing 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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