SBA rules · SOP 50 10 8.1

Can an SBA loan finance a gas station?

Yes, SBA 7(a) and 504 loans can be used to finance the acquisition, construction, or operation of a gas station, subject to specific environmental, supply agreement, and equity rules.

Quoted from SBA SOP 50 10 8.1Every quote checked word for word

In detail

Program eligibility: Gas stations (NAICS Subsector 457) can be financed using Standard 7(a), 7(a) Small, SBA Express, and 504 loans, but they are expressly ineligible under Export Express, the Export Working Capital Program (EWCP), and International Trade (IT) loans.
Environmental requirements: Any loan secured by real or personal property currently used to operate a gas station must begin with a Phase I Environmental Site Assessment (ESA) conducted by an independent Environmental Professional, comply with Appendix 7, and demonstrate full compliance with tank and equipment testing prior to disbursement.
504 Borrower contribution: Gas stations are classified as Limited or Special Purpose Properties under the 504 program, which increases the minimum required Borrower contribution to 15%, or 20% if the business is also a new business.
Fuel supply and dealer agreements: Agreements covered under the Petroleum Marketing Practices Act (PMPA), such as distributor, dealer, fuel supply, or jobber agreements, are treated as franchises and must comply with SBA franchise review rules and Directory listing procedures.

The source

What the SOP says

“For purposes of clarification, small businesses in the following NAICS Industry Subsector Codes cannot be financed using an Export Express Loan, but may be financed using other SBA 7(a) financial assistance:

SOP 50 10 8.1, Chapter 5: 7(a) Export Trade Finance > Other Restrictions that apply to Export Express Loans (lines 2389-2390)✓ Verified

“If the NAICS code begins with 457 (gas stations with or without convenience stores), the Environmental Investigation must begin with a Phase I and the SBA Lender must also refer to and, if applicable, comply with “Environmental Investigation Requirements for Gas Station Loans” in Appendix 7.

SOP 50 10 8.1, Chapter 5: Other Core Requirements > Environmental Investigation Steps (lines 1500-1508)✓ Verified

“The Environmental Investigation performed by the Environmental Professional must include a determination whether the gas station is in compliance with all regulatory requirements, if any, pertaining to tank and equipment testing. A loan may not be disbursed until full compliance is achieved.

SOP 50 10 8.1, Appendix 7: Requirements Pertaining to Gas Station Loans > NOTE (lines 4576-4584)✓ Verified

“Must contribute at least 15%, in which case the Debenture will finance no more than 35% of the Project and at least 50% of the Project financing will be from banks or other financial institutions, state or local government, or foundations or other non-profit institutions.

SOP 50 10 8.1, Chapter 1: Eligibility through Submission of Application > Businesses with a Limited or Special Purpose Property: (lines 3447-3479)✓ Verified

“Although exempt from FTC disclosure requirements, all agreements and relationships that are covered by the Petroleum Marketing Practices Act (PMPA), 15 U.S.C. 2801 et al. (e.g., gas stations with distributor, fuel supply, dealer and/or jobber agreements), are included within the FTC definition of “franchise” and are, therefore, subject to the procedures described below.

SOP 50 10 8.1, Chapter 1: Primary Applicant Eligibility Requirements > Documenting Applicants’ Eligibility (lines 542-547)✓ Verified

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