Acquisition
Financing the purchase of an operating gas station
Buying a station that is already trading is a different file from building one or from refinancing one you own. The lender is buying the same thing you are — a set of fuel volumes, an inside margin and a site — and almost everything they ask for is aimed at proving those three are real.
Step 1 of 5
Buy or refinance commercial property
About the property
Start with what it is and what you're trying to do.
How an acquisition is financed
The first question is what is actually being sold. The real estate and the business together, the business alone with a lease on the site, or the real estate alone with a tenant operator in place. Each is a different loan, and a seller who says "the station" may mean any of them. Get this settled in writing before anything else, because it decides which lenders can even look at it.
The second is what the business earns. An operating station is underwritten on its trading history — monthly fuel gallons, the margin per gallon, inside sales and the margin on those, and what it costs to run. Two or three years of returns, plus a year to date, is the normal ask. A seller who cannot produce them is not necessarily hiding anything, but the file gets much harder and the lenders who will write it are fewer.
The third is the site itself. Tanks, lines, dispensers and canopy all have an age and a condition, and an environmental review is a normal part of the process rather than a sign that something is wrong. On a site with underground storage tanks this is usually where the timeline is set, not by the lender's underwriting.
Where the purchase includes a franchise or a fuel supply agreement, the brand has to approve you as well. That approval runs on the brand's schedule and in parallel with the loan, and it is a common reason a closing date moves.
What a lender examines
Fuel volumes
Monthly gallons over two to three years, from returns and supplier statements rather than from the listing. A volume trend that is falling is not fatal, but it will be asked about.
Inside sales and margin
The convenience store is often where the profit actually is. Lenders look at inside sales separately from fuel, because the two behave differently.
What you are buying
Real estate plus business, business only, or real estate only. This decides the programme, the collateral and the documents.
Your operating experience
Whether you have run a station, a store, or a comparable retail business. First-time operators are financed, and a strong manager or a franchise agreement can carry weight here.
The tanks and the environment
Tank age, material, monitoring records, and whether an environmental review is clean. This routinely sets the closing timeline.
Franchise or supply agreement
Brand approval, the remaining term, and what the agreement obliges you to spend on image upgrades.
Credit and cash to close
Your credit profile, the cash you are putting in, and reserves for working capital after closing — a station that closes with no inventory money is a problem.
Questions buyers ask
Can I finance a station if I have never run one?
Often yes. Operating experience is one of the things weighed rather than a hard gate, and buyers regularly finance a first station — particularly where there is an experienced manager staying on, a franchise with its own training, or comparable retail experience behind you. It is usually reflected in the terms rather than in a flat no. Which lenders will write a first-time operator, and on what basis, is set by each lender.
The seller will not give me tax returns. Can it still be financed?
It is much harder, and you should treat it as a warning rather than an inconvenience. Lenders underwrite the trading history, and without returns there is very little to underwrite. Some files can be built on supplier fuel statements, POS reports and bank deposits instead, but expect fewer lenders, more scrutiny and a longer process. If the seller cannot evidence the earnings, ask yourself what you are actually buying.
What is a Phase I, and do I need one?
A Phase I environmental site assessment is a review of the site's history and current condition for signs of contamination. On fuel property it is a standard requirement, not an accusation. If it flags something, a Phase II involves actual sampling. Start this early — it is the single most common reason a station purchase takes longer than the buyer planned.
Do I have to keep the brand?
It depends on the supply agreement attached to the site and on what you want. Staying branded usually means the brand must approve you and you inherit obligations, sometimes including image upgrade spending. Debranding is possible on some sites and changes both your fuel supply and your economics. Either way the lender will want to know which you are doing before closing.
How long does an acquisition take?
Longer than a residential purchase. The environmental work, a commercial appraisal, brand approval and the business diligence all run on their own schedules, and the slowest of them sets your date. We will tell you what the specific lender we are placing with says about their own timelines rather than quoting an average, and no closing date can be promised before a file is underwritten.
Who this page is for
- Someone under contract, or about to be, on a trading fuel station.
- An operator buying their second or third site.
- A buyer taking over a station from family or from a retiring owner.
- Someone buying the business while the site stays with a landlord.
- A buyer who has been told by a bank that the tanks are a problem.
What the money is used for
- The purchase price of the business, the real estate, or both.
- Opening inventory — fuel in the tanks and stock on the shelves.
- Working capital for the first months of operation.
- Required image upgrades where a brand agreement obliges them.
- Equipment replacement identified during diligence.
- Closing costs, environmental reports and professional fees.
The words you will hear
Station deals have their own vocabulary, and most of it is decided before you get to the loan.
- Gallons
- Monthly fuel volume. The headline number on any station, and the one a lender verifies against supplier statements rather than taking on trust.
- Inside sales
- Everything sold in the store rather than at the pump. Usually a much better margin than fuel, and often where the real profit sits.
- UST
- Underground storage tank. Age, material and monitoring records all matter, and they drive the environmental review.
- Phase I / Phase II
- The environmental assessment. Phase I is a records and site review; Phase II involves sampling, and only happens if Phase I raises something.
- Image upgrade
- Work a fuel brand requires to keep the branding — canopy, dispensers, signage. It can be a significant obligation that transfers to you.
- Supply agreement
- The contract obliging the site to buy fuel from a particular supplier, for a term. It usually survives the sale.
- Goodwill
- The part of the price that is not tangible property or inventory. Lenders treat it differently from real estate, which is why the split in your purchase agreement matters.
How the split changes the deal
Illustrative structures showing how the same site produces different files. Not offers, and not terms available to you.
Real estate and business together
A buyer purchases the site and the operation as one transaction. The property is the principal collateral, the business earnings support the payment, and the file looks most like a commercial real estate loan with an operating business attached. This is usually the most financeable version.
Business only, site leased
The seller keeps the property and the buyer takes the operation on a lease. There is no real estate collateral, so the lease itself becomes critical — its remaining term, its assignability and whether it runs at least as long as the loan. A short or unassignable lease will stop the file.
Station needing work
A site with tired dispensers, an old canopy, or a brand-mandated image upgrade coming. The improvement cost has to be in the plan from the start rather than discovered afterwards, and it changes both the money you need and the lenders who will look at it.
What to gather now
Every one of these will be asked for. Starting on them before you have a lender is the single biggest thing you can do for your timeline.
- Purchase agreement, with the price allocated between real estate, business, equipment, inventory and goodwill.
- Two to three years of business tax returns, plus year-to-date financials.
- Monthly fuel volume reports and supplier statements.
- Point-of-sale reports showing inside sales and margin.
- The current fuel supply and any franchise agreement.
- The lease, if the real estate is not included.
- Tank records: age, material, testing and monitoring history.
- Any existing environmental reports on the site.
- Your entity documents, personal financial statement and ID.
The order it actually happens
- 1
Settle what is being sold
Real estate, business, or both — in writing, with the price allocated. Everything downstream depends on this.
- 2
Get the trading records
Returns, fuel volumes and POS reports. If the seller will not produce them, find out why before you spend money.
- 3
Start the environmental early
Order the Phase I as soon as you are under contract. It is the most common cause of a delayed closing on fuel property.
- 4
Place the file
We match it to the capital sources that write this property type and this structure, rather than sending it everywhere.
- 5
Brand approval in parallel
If the site stays branded, your application to the brand runs alongside the loan, not after it.
- 6
Appraisal and diligence
A commercial appraisal, equipment review, and the lender's own conditions.
- 7
Close and take over inventory
Fuel in the ground and stock on the shelves are usually settled at closing. Have the working capital for it.
What goes wrong
Leaving the environmental to the end
It is the longest lead item on most station deals. Ordering it late does not just delay the closing, it can collapse the contract when a problem appears after the inspection period has run.
Taking the seller's volume figures on trust
The gallons in the listing and the gallons on the supplier statements are not always the same number. Lenders will verify; you should verify first.
Not reading the supply agreement
It usually transfers with the site, and it can carry image upgrade obligations, minimum volume commitments and a term you did not choose.
Closing with no working capital
Buyers budget the purchase and forget that the tanks and the shelves have to be filled on day one. A station with no inventory money is in trouble immediately.
Assuming the lease transfers
On a business-only purchase, an unassignable lease or one with less term than the loan will stop the deal. Check assignability before anything else.
Related pages
- Buying with the real estate →When the property is part of your purchase.
- Buying the business only →When the site stays with a landlord and you take a lease.
- Convenience store financing →When the store is the deal and fuel is secondary or absent.
- Gas station financing →The main page, covering every version of these deals.
- Commercial real estate →How commercial property is underwritten generally.
Tell us about the station
The address, what is being sold, the monthly gallons and the inside sales are enough for a first read.
Step 1 of 5
Buy or refinance commercial property
About the property
Start with what it is and what you're trying to do.
This is not an offer and not an approval. Terms are set by a lender, in writing, after underwriting, and vary by lender, by property and by file.
Buying a station?
Send what you have — even a listing and a purchase price. We will tell you what the file needs and what is likely to set the timeline.