SBA Gas Station Loans

SBA gas station loans by the numbers

From FY2015 through June 30, 2026, the SBA approved 6,312 gas station loans under 7(a) and 896 under 504, net of cancellations.^[1] These are large loans by SBA standards, and most run 25 years or more, which usually means real estate is in the deal.

Buyers of existing stations are a bigger share of SBA gas station lending than of laundromat or car wash lending. Most of those purchase loans also run 25 years or more, a sign that the land usually comes with the station.

Your first choice: buy, build, or add a site

• Buying an operating station is a change of ownership, usually through 7(a). The lender tests the seller's past cash flow at 1.25 or better, and your projections can't be used to pass.^[2]
• Building a new station can use a 7(a) start-up loan (at least 10% down, projections reaching 1.15 coverage within 2 years) or a 504 loan, where a bank, a Certified Development Company (CDC) and your contribution share the project. Both are common: from FY2019 on, start-ups were 11.1% of 7(a) gas station loans and 30.8% of 504 gas station loans.
• Adding a second station as an existing owner can qualify as a Business Expansion if your company buys 100% of the other station's ownership. The coverage floor drops to 1.15.

Each path asks something different of you. The sections below follow the three deals in the book.

The land and the business are valued separately

When a station sells with its land, the lender subtracts the appraised real estate from the price. What is left is the Business Purchase Price, and an independent business valuation has to support it. If you pay more for the business than the valuation supports, the SBA says the difference must be made up with equity.

In the book's main example, Samir Haddad, a convenience store manager for 11 years, buys a branded station with eight fueling positions and a 2,800 square foot store for $1,900,000. The real estate appraises at $1,250,000, so the Business Purchase Price is $650,000: the tanks, dispensers, store equipment, inventory and goodwill. The independent valuation comes in at $670,000, which covers it.

On one 7(a) loan, the real estate share can run up to 25 years and everything else is limited to 10. The lender weights the two and rounds. Samir's $1,764,000 loan comes to a 20-year blended term. You can also choose two loans, one for the business and one for the property.

The tanks must pass before the loan funds

The SBA has a separate appendix for gas stations, Appendix 7. It applies when the loan is secured by the station's real estate, or by its tanks, pumps and lines, at a property currently used for fueling. It applies even if the fuel equipment is the only collateral.

• Phase I first. The review must begin with a Phase I Environmental Site Assessment by an independent environmental professional, at any loan size. The seller's old report does not count as the SBA report.
• Testing compliance before disbursement. The environmental professional decides whether the station meets the tank and equipment testing requirements that apply to it. The loan may not be disbursed until it does, and leaking or defective equipment must be repaired or replaced first.
• Phase II rules. If the professional recommends sampling, the Phase II must be done by an independent licensed Professional Engineer or Professional Geologist with the equivalent of 3 years of relevant experience.

Samir's three tanks were installed in 2004. Age alone does not fail a tank, but it means more questions and a stronger need for records. For Samir, that means getting the full testing and repair history before paying for other diligence, and writing testing time and repair responsibility into the purchase contract. A failed test and a tight closing date are a bad combination.

Federal tank rules apply on top of the SBA's. Anyone who takes over a regulated underground tank must notify the state agency of the ownership change within 30 days of acquisition, and tank owners at stations must show $1 million per occurrence of financial responsibility for cleanup and third-party claims, often through insurance or a state fund.^[3] The SOP does not set its own tank insurance rule, so ask your lender what proof it wants at closing.

If the Phase I finds an old leak

A contaminated station is not automatically a dead end. The lender can decline, or it can follow the SOP's contamination rules. In a purchase, those rules start with one requirement: the seller must sign the SBA Indemnification Agreement. A seller who simply refuses is not a reason for a waiver.

In the book's expansion example, Daniel Kim's Phase I on a second station finds an old release. A Phase II by a licensed engineer or geologist follows. The estimated cleanup of $120,000 is accepted by the state tank fund, and the seller signs the indemnity. A fund approval that covers the cost is one of the factors the SOP lists. Another is an escrow of at least 150% of the estimated cleanup that does not come from SBA loan proceeds.

One more clause catches station buyers. If your deal uses the SBA indemnity agreement, you agree not to record a covenant that limits the fuel brand on the property until the mortgage is released. Settle that with your fuel supplier before you sign its agreement.

The fuel supply agreement is a franchise to the SBA

SOP 50 10 8.1 treats fuel supply, dealer, distributor and jobber agreements covered by the Petroleum Marketing Practices Act as franchises, even though they are exempt from federal franchise disclosure. That brings three rules with it.

• The brand must be on the SBA Franchise Directory, or the lender cannot submit or approve the loan.
• Every other agreement that meets the franchise definition, such as a coffee or food brand inside the store, must be listed too.
• If any one of your brands has been found ineligible, the loan cannot be processed.

Unbranded supply does not automatically avoid the check. Whether a plain supply contract is a franchise depends on what it says. Your lender decides how to treat it, and in some cases the SBA makes the final call. Get the complete agreement early, with every amendment, and read the parts that decide your cash flow: the term, the volume commitments, the image obligations, and whether it can transfer to you.

Store income, lottery and cash records

Most of a station's receipts come from fuel, and much of that money goes straight back out to buy the next load. Samir's station reported $4,800,000 in receipts, mostly fuel. Large receipts tell the lender how busy a station is. Cash flow tells it what pays the loan.

Lottery is a separate test. A business that gets more than one-third of its prior-year gross revenue from legal gambling is not eligible. Commissions from state lottery sales under a state license, and gaming licensed and supervised by the state, can stay eligible within that limit. Samir's station earned $38,000 in lottery commissions, well under the line. If the store has gaming machines of any kind, ask your lender early how it will treat them.

The lender reconciles the seller's numbers against IRS tax transcripts, and income that never reached a return does not count. Before you talk price, lay twelve months of bank deposits next to the monthly sales reports and the tax return. If they don't tie, you want to know before your lender does.

Down payment and seller notes on a purchase

For a first-time buyer, the SBA minimum is 10% of total project cost, and it can't be reduced or waived. A seller note counts toward it only on full standby, meaning no principal or interest for the life of the SBA loan, and limited sources like that can cover no more than half of the required injection. A temporary exception for veterans: from November 11, 2026 through September 30, 2027, the SBA has announced that an eligible veteran purchasing an existing business with a 7(a) loan may raise the full 10% from these sources (SBA News Release 26-117); ask your lender how it applies.

Samir needed $196,000. He put in $146,000 of cash, and the seller carried $50,000 on full standby, under the half cap of $98,000. Many lenders ask for more than the minimum.

Samir's deal, start to finish

Every number below comes from the book's worked example. The interest rate is illustrative.

Building a new station through SBA 504

If you build through 504, the special purpose rules set your contribution. Gas stations are on the SBA's 504 example list of limited or special purpose properties, so a new business building one contributes at least 20%. The book's build example uses 504. The CDC debenture covers no more than 30%, and the bank at least 50%.

A new build is judged on projections. If year two pays the loan and year one doesn't, the SBA wants enough cash on hand to cover the gap, and Teresa's reserve does that. Store inventory and opening working capital can't go in a 504, so plan a 7(a) or a line of credit for them. Expect a Phase I even on raw land: the SOP says one should always be obtained when a business sells fuel.

Adding a second station

An owner who has run a station for at least two full fiscal years and buys 100% of the ownership of another station can qualify as a Business Expansion. The coverage floor is 1.15 instead of 1.25, and the lender may count both stations' cash flow.

Daniel's existing station produces $320,000 of cash flow against $95,000 of debt service. The second station costs $1,400,000 with its land ($850,000 appraised real estate and $550,000 for the business, valued at $560,000). With $40,000 of working capital, the project is $1,440,000, and his $1,296,000 loan runs on a 19-year blended term. Combined coverage is 2.22.

For a Business Expansion, the lender may reduce or waive the 10% injection. A lender that waives it can't put dedicated working capital in the loan, and Daniel's loan includes working capital, so his lender kept the full $144,000.

SBA 7(a) or 504 for a gas station

For a 7(a) purchase, Special Purpose is a separate call your lender makes and documents. The SOP's examples there are storage units and hotels, so plan on being underwritten on the seller's history.

Related guides

• SBA Car Wash Loans
• SBA 7(a) vs 504 Comparison
• SBA Collateral Requirements
• Verifying Seller Financials
• What Changed in SOP 50 10 8.1