October 11, 2021

Gas Station Business Loans: How To Apply for and Use Funding

If you own a gas station or have plans to buy an existing one, gas station business loans should be on your radar. They can provide you with the funds you need to meet various business goals. In this blog post, we'll explain what you need to know before you pursue a gas station business loan.

How to Use a Gas Station Loan

Gas station loans are versatile, meaning you can use them to fund just about any business expense. The most common uses for a gas station loan include:

1. Afford Day-to-Day Expenses

Once you open a business, you have to pay for ongoing expenses such as:
  • Rent or Real Estate
  • Utilities
  • Payroll
  • Insurance
  • Fuel
  • Maintenance
A gas station business loan can help you afford all of these expenses, especially during slow seasons.

2. Expand Your Gas Station

If you already own one successful service station, why not expand your business? Using the funds from your small business loan, you can afford expansion costs such as:
  • Open additional business locations
  • Move to a larger location
  • Buy a gas station that already exists (therefore lessening competition)
  • Hire additional employees
  • Expand your existing business location

3. Renovate Your Gas Station

Using a gas station business loan, you can renovate your gas station to ensure that it is clean and inviting. Paying for renovation costs can add up quickly, especially if your business location is outdated. Once you receive funds, you can upgrade your fueling stations, update store displays, or improve your business location's interior. Whatever your renovation goals may be, having access to a loan can help you meet them.

4. Purchase Inventory

If your business location sells convenience products, you can use a gas station business loan to make sure you always have enough inventory on hand. If your gas station offers limited inventory, consider expanding your food options, convenience items, and other items that patrons frequently request. Before you purchase inventory, you should conduct market research to see what inventory your location is missing. Or, you may benefit from asking current customers if there are items that your gas station doesn't offer that they have to purchase elsewhere.

5. Upgrade Business Equipment

As a business owner, it’s essential to keep your equipment updated. If your storage tanks, fueling pumps, point-of-sale systems or other equipment are long past their prime, gas station financing may make sense. It can help you upgrade what you currently have or buy new equipment. However, remember that if you take out an equipment loan, it can only be used to upgrade or replace equipment. If you need funding for other business expenses, you won't be able to use this loan to make these purchases.

6. Cover Unexpected Expenses

Unexpected expenses are likely to pop up every once in a while, regardless of industry. If a fuel pump suddenly breaks, for example, a gas station loan can help you pay for it. Or, perhaps your gas station is located in an area that frequently experiences inclement weather, you may need funding to repair damage. Ultimately, having access to business funding can be a real lifesaver, especially if you’re short on cash flow and have emergency costs. New call-to-action

Common Types of Gas Station Business Loans

There are numerous business loan options available to gas station owners. However, your unique financial situation will determine the best financing option for you. Before you apply for business financing, research these popular funding types:

1. Term Loans

With a term loan, you receive a lump sum of money at once. Then, you'll pay it back via monthly payments over a term, which may range from a few months to several years. If you know exactly how much money you want to borrow, a term loan may be your best financial option.

2. Business Lines of Credit

A business line of credit works a lot like a credit card; you can withdraw as much or as little as you’d like up to a set credit limit. It's important to note that you’ll only pay interest on the amount you borrow. If you’re looking for a flexible form of financing and are unsure of how much your expenses will cost, a business line of credit may be a good choice.

3. SBA Loans

There are many benefits to pursuing a Small Business Administration (SBA) loan if you're a business owner and can't qualify for other financing methods. Most notably, these loans come with low interest rates and long repayment terms. The SBA 7(a) loan is ideal if you’d like to buy or expand your business as you may get approved for up to $5 million. If you’re looking for a smaller loan with faster funding, an SBA Express loan, which offers up to $350,000 is a better route.

4. Equipment Loans

If you need funding to purchase new equipment for your gas station, equipment financing can help you out. An equipment loan must be used to lease or purchase business equipment and can't be spent on other business expenses. Note that your equipment will serve as collateral, so if you default on your loan, the working capital lender can legally seize it.

5. Merchant Cash Advance

A merchant cash advance can be a smart choice if your gas station has a high volume of credit card sales. With this type of business financing, you’ll receive lump sum financing and the lender will collect a percentage of your daily or weekly credit card sales. The cash advance provider will continue to do this until you’ve fulfilled your obligation.

Conclusion: Consider Your Shop Gas Station Business Loan Options

There's no shortage of gas station loans out there, but before you move forward, consider your unique business needs and financial situation. Next, do your research and shop around to find out which options are right for your situation. Lastly, choose a gas station business loan and make every effort to repay it on time and in full.