Loans by purpose
Loans to buy a gas station
A gas station purchase loan finances the land, the building, the equipment and the business together, secured by the real estate. The lender sizes it from the station's reported cash flow and the appraisal, and requires a Phase I before closing. Your down payment covers the gap, sometimes with a seller note. Check the tanks and the fuel supply agreement before you sign.
Price vs value
Why your loan may be smaller than you expect.
A seller prices a station on what it could earn. A lender lends on what it does earn, on paper. Three gaps show up again and again.
- Unreported cash. If inside sales are not on the tax return, the lender cannot count them. A price based on "real" sales will not appraise.
- Business value vs. real estate value. Part of the price is goodwill. Lenders lend less against goodwill than against land and buildings.
- Deferred work. Old dispensers, a tired canopy or tanks near the end of their life lower the value and may become a condition of the loan.
Price the loan in our property loan calculator and check the payment against the seller's numbers before you make an offer. If the station cannot carry the loan on its reported numbers, renegotiate now, not after the appraisal.
Deal structure
Real estate, business and seller notes.
Real estate and business together
Our loans are secured by real estate, so the usual deal is buying the station and the land together.
Seller financing
Many station sales include a seller note: the seller lends part of the price, behind the main loan. It lowers your cash at closing and keeps the seller invested in a smooth handover.
- The main lender must approve it, and it usually sits behind the main loan.
- Watch the note's payment: the station's cash flow must carry both loans.
- Plan the exit: many owners refinance the seller note once they have a track record.
Due diligence
Due diligence, in the right order.
Order matters. Doing these in the wrong order wastes money and time.
- Read the books. 3 years of tax returns, monthly gallons, fuel margin and inside sales. Compare the tax returns to the seller's P&L.
- Read the fuel supply agreement. Does it transfer to you? When does it end? Is there incentive money to repay if the brand changes? Any volume commitments?
- Check the tanks. Install dates, construction, permits, the last compliance inspection and leak history. In California, single-walled tanks had to be permanently closed by December 31, 2025 (State Water Board). Your local CUPA holds the permit file; find it in the Unified Program Regulator Directory.
- Order the Phase I early in escrow. Under the federal All Appropriate Inquiries rule it must be done within one year before you take title, with key parts within 180 days (40 CFR 312.20). What a Phase I means for your loan.
- Appraisal by an appraiser who knows service stations.
- Licenses and transfers: beer and wine license transfer with California's Department of Alcoholic Beverage Control, lottery retailer, tobacco, weights and measures, local business license. Start early; some take weeks.
- Inventory count at closing, usually paid separately from the price.
Get ready
Timeline and documents.
What usually takes longest
- Phase I, and a Phase II if one is needed
- Appraisal
- Beer and wine license transfer
- Brand approval of a new dealer, for branded stations
What to have ready
- Purchase agreement and certified escrow instructions
- The seller's 3 years of tax returns, P&Ls, and monthly gallons and inside sales
- The fuel supply or franchise agreement
- Your personal financial statement, 3 years of tax returns, and proof of down payment
- Your résumé and a short business plan
Full list: document checklist.
Example
How the numbers fit together.
A buyer agrees to a price of $3,000,000. The lender sizes the loan as the lower of two limits: the loan-to-value limit on the appraised value, and the loan the station's cash flow supports at the lender's DSCR. Say that comes to $2,100,000.
The buyer then needs $900,000 plus closing costs and inventory. Or, if the lender allows it, $600,000 down plus a $300,000 seller note.
FAQ
Buying a station: questions.
How much does it cost to buy a gas station in Los Angeles?
Prices vary widely with the land value, gallons, store sales and condition. In LA, the land is often a large share of the price. Instead of an average, start from the station's reported cash flow and the loan it supports: estimate it here.
Do I need gas station experience to buy one?
It helps a lot. Without it, show retail or management experience, a solid plan and reserves, and ask the seller to train you after closing.
Can I keep the station's brand?
Usually, if the brand or its supplier approves you as the new dealer and the agreement transfers. Ask about the approval process early. It can take as long as the loan.
Who pays for the Phase I?
Usually the buyer, because the buyer and the lender rely on it. The lender must be named as a user, or be able to rely on it. Ask before you order one.
Found a station? Send Shawn the listing before you make an offer.
Buying, refinancing or building, the first step is the same: a short call about the property, the numbers and your timeline.