It can be quite challenging but it is still possible to buy a gas station with no money down. Have it in mind that over the years, a good number of small business owners have proven that it is possible to purchase an existing business through 100% financing.
Howbeit, it is essential to note that there are numerous hurdles to surmount in order to do so. When it has to do with funding, getting into the gas station business is known to be really costly.
The startup costs for this sort of business range on average from $250k to $2 million even for a small gas station. Aside from that, unless you have access to large stockpiles of motor-grade gasoline, you will have to get into a valid contract with a gasoline supplier.
Purchasing an existing gas station is one of the best ways to start or expand a small business. A good number of gas station loans will necessitate a down payment or collateral to guarantee that you’ll pay off the loan. However, have it in mind that it’s feasible to buy a gas station or service station with no money down.
It is also possible to locate a seller who cares deeply about their business and is looking to sell to an entrepreneur who will care about it.
Howbeit, since you are looking to make the purchase without a down payment and depending purely on financing, you will most often only find gas station owners who are so eager and looking to offload the business to the first person who makes contact. Owing to that, it’s pertinent to be prepared to ensure that you don’t make a bad investment decision.
Steps to Buy a Gas Station With No Money Down
Find and identify potential gas stations for sale
This is the first step in the process of buying a gas station with no money down. You will have to first locate viable gas stations that are listed for sale in your desired location. You can leverage sites such as LoopNet, BizBuySell, or even local business brokers to find gas stations available in your area.
Evaluate the financials and analyze the feasibility
After you must have discovered a gas station that suits your interest, the next step will be to extensively evaluate its financial statements, and this will most often include the profit and loss statements, tax returns, and cash flow reports. Make sure to take your time to analyze the station’s profitability, and possibility for growth, coupled with every other business-related risk.
Explore seller financing options
After finding a suitable gas station as well as ensuring that the financial and feasibility reports meet your interests, this is the ideal time to reach out to the seller or the listing agent to get the necessary information.
Seller financing tends to refer to the seller making available a loan to the buyer, and this makes it possible for them to buy the gas station with little to no money down. Ensure to carefully evaluate the terms and conditions of the financing arrangement, especially factors like the interest rate, repayment schedule, or even every other collateral considered necessary.
Check for other sources of finance
There are many other sources to consider when looking to purchase a gas station with no money down. For one, you can consider reaching out to private investors or potential business partners who may be willing to join the investment.
You can gain their interest by providing a detailed business plan that proves the possible profitability and growth opportunities. Aside from that, you can also look up government programs or grants that support small business owners, especially those in the oil and gas industry.
You should also consider checking for lease or lease-to-own options. This option makes it possible to operate the gas station while slowly paying off the purchase price over time.
Negotiate with the seller
After you must have discovered an opportunity that seems viable, it is now time to sit down with the seller and negotiate how to secure the best possible deal. This will most often involve negotiating the purchase price, terms, and conditions that apply especially pertaining to finance, as well as every other necessary concession that can work to minimize your upfront investment.
You should as well take into account the expertise of professionals, such as attorneys, accountants, or environmental experts, to assist with the due diligence process.
Sources of Finance Without Involving Your Own Money
Sellers are known to provide some form of financing to ensure that viable buyers can purchase their properties. However, note that they do this because they have to – not because they want to. Sellers in most situations would prefer not to offer financing but instead get the full payment for their gas station at once.
Howbeit, it has become necessary for some to offer financing since it helps to draw in buyers who have a genuine interest to see the business flourish.
Buyers are known to prefer this sort of financing as it usually offers competitive terms. It is also less stressful to obtain than conventional lender financing. Seller financing comes with a wide range of advantages because it ties some of the seller’s payments to the performance of the business.
A good number of small and mid-sized gas station purchases in this modern age tend to leverage some form of lender financing. Buyers usually leverage one of two options – conventional loans or Small Business Administration (SBA)-backed loans. SBA-backed loans are considered the most valuable option.
SBA-backed loans are quite easy to obtain especially when put in comparison with conventional loans. The SBA makes available perks or incentives to lenders to make loans available to the public. Have it in mind that these SBA incentives offer a vital advantage over conventional bank financing.
It’s feasible to buy a gas station or service station with no money down, but first, you will have to invest in locating the right lender and meet some strong qualifications in order to do so. After you must have discovered an opportunity that seems viable, it is now time to sit down with the seller and negotiate how to secure the best possible deal.
You should also consider leveraging the expertise of professionals, such as attorneys, accountants, or environmental experts, to assist with the due diligence process.