Gas Station Financing Requirements

Gas stations / convenience stores financing requirements are very different than other types of retail in terms of the documentation you need for financing. There are two types of sales, fuel sales or outside sales and convenience store sales, or inside sales. One could make the argument that “so goes fuel sales, so goes inside sales.” This is not entirely true but is in a higher percentage of cases. Regardless of what type of business or commercial real estate it is, a lender will always want a minimum of two, preferably three years of business returns, as well as a current interim. This should be obvious as to the reasoning. Underwriting a gas station is definitely different than other asset types though. Number one, the only way you can differentiate inside sales and fuel sales is to have a profit / loss statement that indicates it because it does not on a tax return, whether it’s a 1120, 1120-S, Schedule C, Sole Proprietor or whatever. Some accountants, for whatever reason, do not break out inside sales from fuel sales. If they do not, get another accountant. How do you know how your business is really doing if you don’t have that snapshot of the performance of the business. Most lenders will also want to know the fuel gallonage of the store. There are a few type of philosophies here. High gallons with low margins, low gallons with high margins and an average of either. There is no right or wrong way depending on your motivation. If you’re looking for high fuel sales in terms of gallonage, and you are pumping hundreds of thousands of gallons monthly, there is a good possibility you will have higher inside sales.

PetroMAC has their own loan questionnaire which goes into more depth about the facility with regards to square footage of land, square footage of building, when built, customer traffic, road traffic, age and type of tanks, and other questions. This will from the outset indicate the level of desirability of the property as well as the business. There is no joy owning a gas station, just to say you own a gas station. Some of them are money pits and some of them are cash cows. While you do hear “location, location, location” as the most important thing, some people are sharp enough to make their site perform wherever it is. Obviously a road with a traffic count of 50,000 vehicles a day will have more opportunities than locations with 10,000 vehicles a day, but well run stores can capture a high percentage of that traffic, regardless of how many vehicles and where a site is located.

If you’re simply trying to pre-qualify for financing, that list of documents is much different than the documentation you will need to submit to a lender to underwrite. We like to get at least the most recent years cash flow, a Personal Financial Statement for the borrower so we can evaluate how the site cash flows since that is the most common reason a loan would be declined.

If you’re looking for a complete list of documents to submit this is what we go by, This does not include things related to closing like business licensing, insurance, permits, etc. This is also the list for an acquisition and not a refinance or a construction.

PetroMAC Loan Questionnaire
Executive Summary (Basically an outline of the transaction)
Estimated Usage Of Proceeds (especially if secondary financing is being used like fuel supplier incentives or secondary financing like a seller second, or gift letters for equity)
Purchase Agreement (Signed and executed)
Photos Of Property
Fuel Supply Agreement (Not the short intent to supply but the full version, all schedules included)
Pro forma projection with assumptions for 1st, 2nd years (if a startup and no financials are available)
Secondary Financing Agreement (Fuel Supplier/Seller, If Applicable)
Copy Of Recent Appraisal, Phase I and Survey (If available)
Articles of Incorporation & Federal By-Laws for company to be financed

These are basically documents about the transaction in general, and nothing on the borrower and the seller. The list below is what we normally need from the borrower about their qualifications to purchase.

Personal Financial Statement (PFS) dated within 30 days (for all who own 20% or greater)
Management Resume
Last Three Years Personal Federal Tax Returns (for all who own 20% or greater, all pages and schedules)
Copy of drivers license, social security card or passport and green card front & back (if applicable, if borrower has Permanent Resident Allien status)
Complete Last Three Years Business Federal Returns/Financials With YTD Financials on Affiliates (If applicable)
Gallonage for all affiliates for past three years and YTD (if applicable, preferred if broken down monthly)
Last Three Months Bank Statements (or show source of equity infusion)

Hopefully you will have full financials from the seller in order to fully evaluate the financial “health” of the asset or business that you are purchasing. Simple tax returns will frequently be inadequate as you will not be able to differentiate between inside and fuel sales. Here is a list of normal documentation we will need from the seller. If the seller has an OpCo (operating company) PropCo (Company that receives rent from the Opco) we will need both sets of financials.

Last Three Years Corporate Returns
Last Three Years Profit/Loss Statements
Year To Date Profit/Loss Statement w/balance sheet
Last Three Years Fuel Gallonage (broken down monthly)
List of assets/equipment to be purchased

This is a fairly complete list. The quicker this documentation is received, the quicker you’ll receive an approval and move towards a closing.

You can conveniently apply for a gas station loan with our online application.

You can also download our pdf application here.