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The Great Opportunity: Securing Funding for Gas Station Loans

June 12, 2020

Gas station financing is hot right now. We routinely check in with our lending partners to see what their appetite is and they are telling us that they are interested in funding gas station purchases, refinances, and construction for qualified borrowers. In fact, one of the first loans that the GRP team closed after the COVID-19 pandemic was a gas station development loan.

As part of our Great Opportunity Series, we will discuss why a gas station loan makes financial sense right now for lenders.

Why are Gas Stations Great Opportunities?

• Recession-proof: Gas stations are considered essential businesses. Therefore, gas stations remained open throughout the COVID-19 crisis even during lockdown and travel bans. Gas stations did experience some disruption, as customers curtailed travel to offices and for leisure. However, gas stations that had a variety of food and beverage options as well as other sundries were popular shopping venues, even during the pandemic. Gas stations with service departments also saw an uptick, as people had time to turn their cars in for maintenance.

Convenient: Customers looking for a quick bite to eat or who just needed a few items could pop in and out of a gas station convenience store without encountering long lines. As a result, convenience became critical and will remain a key component of gas stations’ abilities to prosper in any future economic downturns.

Adaptable: Gas stations typically have just one or two cash registers. These registers are the major points of customer-employee contact. Gas station owners can fortify these points of contact with minimal expense, thereby protecting both customers and employees. Skillful, experienced managers also adapted other operational aspects during the peak pandemic times. These modifications included removing self-service items, switching to more packaged goods, adding extra cleaning time, and limiting the use of restrooms.

Fuel Supply Agreements: Fuel supply agreements set up an established “cut” for the supplier. This protects both the supplier and the gas station owner. No matter what the price of the fuel is, the owner will still make money. This built-in stability makes a gas station loan attractive for many lenders.

Another Great Reason to like Gas Stations: 

Advantages over Grocery and Big Box Stores: Gas station convenience stores have fewer shelves to fill and a smaller variety of items. Their customers know this. But this scale allows owners to quickly purchase a smaller amount of items that seem to be “hot”. These items could include toilet paper, bleach, or packaged and frozen food. Flexibility and established relationships with suppliers are the keys to being able to pivot to meet customer demands.

If you are interested in any form of gas station loans, now is the time to act. Read more about other aspects of finding funding in today’s climate here:

Becoming a Better Borrower

What Businesses do Lenders Like Now?

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