Does SBA require a feasibility study for a gas station?
Not automatically. 13 CFR 120.160(b) says SBA "may require" one. Lenders and CDCs typically ask for a study when the station is new-to-industry, the operator is new to fuel retailing, a QSR, car wash or store expansion carries the pro forma, the loan nears the $3.75 million guaranteed exposure cap, or a rebrand creates clawback exposure. The full method is on the gas station feasibility study page.
7(a) vs 504 for fuel stations
| 7(a) | 504 | |
|---|---|---|
| Fit | Acquisitions with goodwill, inventory, working capital | New construction, real estate, long-life equipment |
| Change of ownership | SOP 50 10 8.1 Appendix 15 for loan numbers on or after October 1, 2026 | Real estate portion |
| Contribution | 10% injection for initial acquisitions | 15% for limited or single purpose buildings; 20% if the business is also new (13 CFR 120.910) |
| FY2027 fees | 2% / 3% / 3.5% plus 3.75% tiers (SOP 50 10 8.1); 0% at $700,000 or less if rural | 0.50% upfront, 0.203% annual; waived if rural |
The fee rows above are sourced here. The upfront fee tiers are the maximum chart authorized by 13 CFR 120.220 and set out in SOP 50 10 8.1: 2% of the guaranteed portion on loans of $150,000 or less, 3% from $150,001 to $700,000, and 3.5% of the guaranteed portion up to $1,000,000 plus 3.75% of the guaranteed portion over $1,000,000. The FY2027 rural waiver and the 504 fee rates are reported, not read: the 0% upfront fee on 7(a) loans of $700,000 or less to manufacturers, specified food supply-chain businesses and businesses in a rural area is as reported by Coleman Report on September 8, 2026, and the 504 upfront fee of 0.50% with a 0.203% annual service fee is as reported by Growth Corp and by the Northwest Business Development Association. A gas station qualifies for the waiver only through the rural test, determined from the project address.
504 contribution for limited or single purpose buildings
A station with canopy, tanks and dispensers is typically treated as limited or single purpose. Under 13 CFR 120.910 the borrower contribution is at least 15% for a limited or single purpose building, 15% if the business has operated two years or less, and 20% if both apply. A new-to-industry station built by a new operator is usually a 20% project.
Phase I, tank testing and indemnity waivers
Gas stations have their own appendix in SOP 50 10 8: Appendix 7, "Requirements Pertaining to Gas Station Loans". Read from the SOP itself, at pages 427 to 428, the environmental investigation for all gas station loans, including those secured by gas station equipment only, must begin with a Phase I ESA conducted by an independent Environmental Professional; must include documentation supporting that professional’s determination of compliance with all regulatory requirements pertaining to tank and equipment testing, and the SOP adds "(even if the loan is secured by real property)"; and must include the results of any further investigation recommended by that professional. Any Phase II must be conducted by an independent Environmental Professional "who holds a current Professional Engineer’s or Professional Geologist’s license and has the equivalent of 3 years of full time relevant experience". Where the property is contaminated, the investigation must include "a detailed description of and cost estimate for the recommended Remediation", and a loan "may not be disbursed until full compliance is achieved". Where any oil company or other person holds a right to indemnification from subsequent owners, that right must be waived and released in favour of SBA and the lender, and the document recorded.
Appendix 7 does not reach every gas station borrower: it applies to loans secured by real or personal property used to operate a gas station, and the SOP excludes the case where the applicant only leases the property and it is not collateral, and the case where the only collateral is something other than gas station equipment.
The study carries the Phase I findings, tank ages and remediation estimate into the capital budget and DSCR, and flags deed indemnity issues early.
Fuel supply agreements and the SBA Franchise Directory
SOP 50 10 8, page 31: all agreements and relationships covered by the Petroleum Marketing Practices Act "(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." Page 32: "If the Applicant’s brand meets the FTC definition of a franchise, it must be on the Directory in order to obtain SBA financing."
The study checks the Directory status of the brand and supply arrangement, abstracts the contract, models any incentive clawback as a contingent liability, and notes PMPA timing: under 15 U.S.C. 2804 a supplier must give not less than 90 days’ notice of termination or nonrenewal, and 180 days where it is withdrawing from the market.
Buying an existing station after October 1, 2026 under SOP 50 10 8.1
SOP 50 10 8.1 governs applications that receive an SBA loan number on or after October 1, 2026. The spine sets out the rebuilt rules at Appendix 15, change of ownership and the report itself at the instruments the SOP does mandate. Read from the SOP text, the parts that bite for a station acquisition are these.
- Change-of-ownership rules move to Appendix 15, with four transaction types. The SOP says the debt service coverage ratio "must be satisfied using either the last fiscal year-end or an average of the last two fiscal year-end statements on either a historical or adjusted basis based on the transaction type", and sets it by transaction type: Initial Acquisition 1.25:1, Business Expansion 1.15:1, Owner Buyout 1.25:1, ESOP and Cooperative 1.25:1.
- Historical coverage is defined as "earnings before interest, taxes, depreciation, and amortization (EBITDA) divided by the combined debt service post-transaction", so it is measured on trailing results, not on a projection.
- A Quality of Earnings report is required "For Business Expansion and Initial Acquisition transactions where the Purchase Price as defined in Paragraph A.1 is equal to or greater than $3 million", and the SOP adds that "The $3 million threshold is determined before the application of buyer equity, seller debt, or other financing sources." The Business Purchase Price excludes owner-occupied commercial real estate, valued by appraisal. Published summaries of this rule differ on whether the threshold reads as over three million dollars or as three million or more.
- Citizenship: "SBA financing is limited to business Applicants with 100% direct and/or indirect owners and SBA-required guarantors, all of whom must be U.S. Citizens or U.S. Nationals who have their Principal Residence in the United States, its territories, or possessions." A Lawful Permanent Resident, including conditional status, is named in the SOP’s own list of ineligible persons, so an ownership group that includes one does not qualify.
- The maximum SBA guaranty outstanding to any one business, including affiliates, "must not exceed $3,750,000".
For station acquisitions the study reconciles trailing gallons to supplier invoices, normalizes margin, and splits the purchase price so the Quality of Earnings test and the 7(a) and 504 split can be run. Where trailing coverage falls short, the study shows what a bridge loan and a later takeout would need to deliver. A fully worked new-build case, with the 504 stack and the coverage test, is the SBA 504 gas station example.
SBA gas station loan performance
MMCG Analytics data, SBA FOIA files as of March 31, 2026: gas stations are the fourth-largest 7(a) category with $17.7 billion since 1995; $6.5 billion across 4,166 loans since fiscal 2020; a 3.5% lifetime dollar charge-off rate and a resolved-loan default rate near 15%. Defaults are common but real estate recovers much of the loss. Gallon shortfalls, margin compression and deferred tank capital are what a study should catch.
What the lender receives
- Determination, stabilized DSCR, and historical coverage for acquisitions
- Gallon forecast and breakeven gallons
- Inside sales by category, margin net of card fees
- Supply agreement abstract with the clawback modeled, plus the Directory note
- Phase I, tank and remediation findings carried into the capital budget
- Sources and uses: the 7(a) and 504 split, contribution and Quality of Earnings test
- Competitive set and pricing survey
Studies draw on NACS and EIA public data and state tank registries. All trademarks are the property of their respective owners.
Cost, timeline and independence
Engagements start at $4,900 with fixed-fee scoping (gas station feasibility study cost). Standard delivery is 9 to 16 business days, rush from 5 business days. Fees are fixed before engagement and are not contingent on the conclusion, the loan amount or loan approval. Studies are prepared under USPAP discipline and aligned with SBA SOP 50 10 8.
