Loans by purpose
Gas station construction loans
A gas station construction loan pays for building a new station, or tearing down and rebuilding an old one, in stages as the work gets done. The lender funds from an approved budget: site work, tanks and piping, canopy, dispensers, the store, and sometimes a car wash. Expect to need final plans, a licensed contractor, permits and an environmental report first.
What it funds
What a station construction loan can pay for.
Hard costs
Site work and paving, excavation, underground storage tanks, piping and leak monitoring, dispensers, canopy and lighting, the store building, the car wash tunnel or in-bay unit, signs and the price pylon.
Soft costs
Architecture and engineering, permit and plan-check fees, environmental reports, surveys and inspections.
Closing costs
Title, escrow, appraisal and lender fees.
Rebuilds and major remodels
Replacing an old tank system, adding a store to a fuel-only site, or replacing the canopy and dispensers.
Draws
How the money is paid out.
Construction money is not handed over at closing. It is paid in draws, as each stage is finished and inspected.
- You and your contractor agree on a cost breakdown, line by line.
- When a stage is done, the contractor asks for a draw.
- An inspector checks the work. Then the funds are released.
- Many lenders pay draws through a third-party disbursement company, which pays the contractor and subcontractors directly and collects lien releases.
Tip: build your schedule around the inspections. A slow inspection is a slow draw, and a slow draw can stop a crew.
Reserves
Contingency and interest reserves.
Contingency reserve
Money held back for cost overruns and surprises. Underground work is where surprises live.
Interest reserve
A set-aside that pays the loan interest during construction, so you are not making payments from a station that is not open yet. It is sized from the loan amount, the rate, the pace of draws and the build time.
Permits
Permits a California station needs. Plan for them early.
A gas station is one of the most permitted small buildings you can build. Expect at least these.
- Zoning approval. Many cities require a conditional use permit (CUP) for a fuel station. Check early; it can take longer than construction.
- UST permits from your local Certified Unified Program Agency (CUPA). Find yours in CalEPA's Unified Program Regulator Directory. New tanks must meet California's construction and monitoring standards (State Water Board UST Program).
- Air quality permits for gasoline dispensing and vapor recovery from your local air district.
- Fire department approval for tanks, dispensers and emergency shut-offs.
- Building permits for the store, canopy and car wash.
- Water and sewer approvals for a car wash.
The lender does not need every permit to start talks. It does need to see that you know which ones you need, and how long each will take.
Zoning
Zoning words that can stop a loan.
Owners of older stations run into these terms when they rebuild or refinance.
| Term | What it means for you |
|---|---|
| Legal non-conforming use | The station was allowed when it opened, but current zoning would not allow a new one. It can usually keep running. The risk is rebuilding after a fire or major damage. Ask the city what happens then. |
| Legal non-conforming structure | The use is fine, but the building breaks a current rule such as a setback, height or parking. Rebuilding may mean a smaller building. |
| Rebuild letter | A letter from the city that says if, and how, the site can be rebuilt after a loss. Lenders like it. |
| Zoning endorsement | Title insurance coverage on the property's zoning. In LA County, the title company often relies on the survey and appraisal, because city letters can be vague. |
| Law and ordinance coverage | An insurance add-on that pays to demolish and rebuild to current code. Lenders often require it for non-conforming sites. |
Documents
What to bring, and what goes over budget.
Documents for a construction loan
- Final plans and specifications
- Signed construction contract and line-item cost breakdown
- Contractor's license, insurance, bonding, résumé and 2 years of financials
- Description of materials and equipment
- Permit status list with expected dates
- Phase I (and Phase II if called for) for the site
- Survey and title report
- Your own experience: stations owned or run, other builds
- Business plan with projected gallons and inside sales
Why station builds go over budget
- Contaminated soil found during tank excavation.
- Utility upgrades, such as power for EV chargers and a car wash.
- Permit delays that push the schedule, and the interest cost, out.
- Change orders after the budget is approved.
- Long lead times on canopies, tanks or car wash equipment.
Plan for these in the contingency and the schedule, not after. Next step after the build: refinance into a permanent loan. Buying the site first? See land loans.
FAQ
Construction loan questions.
Can I get a construction loan for a new station with no operating history?
Lenders can fund new stations, but they lean hard on your experience, the site, and a credible projection of gallons and inside sales. A new owner with no station experience will find construction lending hard.
Do I make payments during construction?
If the loan includes an interest reserve, interest during construction is paid from that reserve, so you are not paying from a station that is not open yet. Ask Shawn how the reserve would be sized for your build.
Can the loan cover replacing my old tanks?
Tank replacement is a common reason for a rebuild, especially after California's December 31, 2025 deadline to permanently close single-walled tanks (State Water Board).
What happens if the excavation finds contamination?
Work may stop while it is reported and assessed. That is why the lender wants a Phase I before closing, and why your contingency must be real. See what a Phase I means for your loan.
Planning a build? Talk to Shawn before you sign the contract.
Buying, refinancing or building, the first step is the same: a short call about the property, the numbers and your timeline.