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What's The Best Way To Obtain Gas Station Construction Loans? Is Gas Station Construction Financing Even Available?


When looking to do construction financing, be it a ground or a raze and rebuild, your banker will probably not be as excited about your project as you will be. Regardless of what a great piece of land you might own or there isn't any competition for fifty miles or the company you've retained to do a feasibility study has given you all positive indications, a lender is still going to consider it a start-up…because it is.

Lenders will certainly have preferences on doing construction loans. In reality, almost all types of financing can work, be it SBA 7(a) or 504, conventional or even private financing.

  • Lenders prefer borrowers who currently own gas stations / convenience stores over those who do not
  • Lenders prefer projects where the land is currently paid for instead of land where there is a note or yet to be purchased
  • Lenders prefer projects where everything has been priced out by a reputable contractor as opposed to where they are simply using a square foot multiple
  • Lenders prefer projects where permis have been applied for and approved over projects where this has not been done.
  • Lenders prefer projects where there are additional income streams, i.e. additional business or salaries as additional sources of borrower revenue while a site is being constructed
  • Lenders prefer projects where there have been feasibility studies done by a reputable company over ones that do not have them.  Traffic counts and fuel projections by a fuel supplier are helpful but are not "arms length" and are insufficient.
  • Lenders prefer projects where the borrowers have a business plan (not computer generated) as opposed to those who do not.
  • Lenders prefer projects where site plans have been drawn up as opposed to projects which haven't.

If you have not owned or managed a gas station or convenience store and have yet to purchase the land for the transaction, your request will probably fall on deaf ears for the most part. Construction financing is a process that usually takes a long time to begin with. If you really have not started the process, most lenders will not be interested in even talking unless the loan amount is small.

Two big fears that lenders with construction loans are:

Cost Overruns
Construction Not Being Completed Due To Unforeseen Factors

Lenders will almost always factor in a contingency during the construction phase, usually 10%. If you do not have this factored in your costs, be prepared to do so. Depending on the area where you live, construction can be halted in winter due to bad weather. Construction can be halted due to not having all necessary permits. We have frequently had borrowers approach us for unfinished projects. Perhaps a bank approved a certain loan amount and there were cost overruns and the bank would not lend anymore. The borrower is still making interest payments with an unfinished building and a grumpy banker and borrower. Nobody wins here.

Whether there are two separate loans, or a construction loan that turns into a permanent loan, do not be misled about the loan-to-value (LTV) that banks represent they will do. Usually SBA will offer a higher advance than a conventional loan, but because banks want to be fully collateralized, it really ends up being in the 70-75% range max. The reasons why is this:

Banks discount collateral in the following manner. Land, building and improvements are usually discounted by 20-25%, depending on the lender and machinery / equipment are usually discounted by 50%. Since there will be no good will at the completion of the project, the bank will not discount it (usually the discount is 90-100% and no value is given) Let's say the appraisal comes back of $2,000,000 "as completed" or "as built", of which $1,700,000 might be real estate/building and $300,000 of equipment. At a minimum the land and building will be discounted 20% and the machinery and equipment will be discounted 50%.

This means the actual collateral value of the site is $1,510,000 ($1,700,000 X .8 = $1,360,000 + $300,000 X .5 = $150,000. $1,360,000 + $150,000 = $1,510,000) It's even lower if the discount rate is 25% on land and building instead of 20%. If the bank is lending you 80% of $2,000,000 ($1,600,000) you guessed it, you are undercollateralized. This means the bank will be looking for an additional $90,000 in collateral. Does this mean they will turn you down, not necessarily, but the chances are significantly higher that they will.

Don't assume that because you have a $2,000,000 that this will satisfy them. It won't.

In summation:

Have Your Homework Done Prior To Calling A Lender
Have Plans Drawn Up As Opposed To A Vague Idea Of The Building
Do A Professional Business Plan
Know If You Will Be Branded, What Brand And Know Who Will Supply You
Have A Good Bid From A Contractor
Try To Use Contractors That Have Built Many Gas Stations
Contact Local City/County Offices About The Permit Process
Have A Feasibility Study Done If Possible

PetroMAC has done many gas station, convenience store and truck stop loans and can assist you in ALL phases of the project, as well as negotiating with vendors and suppliers.

Click here to find out the documentation you will need for a construction loan.

Click the financing tab above to find different financing options for your project.

To prequalify for financing, download the following forms and provide the following information and fax to (202) 478-1811 or email to

  1. PetroMAC Loan Request Form (You can also submit online here)
  2. Completed Tri-Merged Credit Report or Credit Authorization
  3. Business Plan

So what are you waiting for? You can convenienently apply online for a loan here or download the prequalification form here.  First time inquiries should inquire at  Let us prove to you that PetroMAC truly "pumps capital into YOUR C-store."



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