Are you considering renovating a gas station, perhaps updating the space to create a new service center or convenience store, or even remodeling the property into a trendy café or office space? It’s a popular thing to do these days, and for a good reason: gas stations are generally located on prime pieces of real estate. They often sit at high-traffic intersections and alongside busy roadways, right in the middle of or at the entrances to towns and cities. What’s more, tens of thousands of gas stations have closed in the last few decades, leaving empty shells on roadsides that serve as nothing more than eyesores, which makes them perfect opportunities for renovation projects.

Savvy investors and entrepreneurs are snapping up opportunities to renovate gas stations and transform them into new businesses. But it’s not quite as easy as it looks, and you need to know what you’re getting involved with. Here’s what you need to know if you want to renovate a gas station.

Challenges of Renovating a Gas Station

Like any project, there are challenges and opportunities associated with renovating a gas station. Let’s get the tough stuff out of the way first. A gas station is often situated at a great location, but there are problems to address before one can seize a new opportunity and redevelop the property.

Environmental Concerns
The first thing you need to know about renovating a gas station is that there are serious environmental issues at stake. These properties feature large underground fuel tanks, which can be costly to get rid of. Even if they’ve already been removed, gas may have leaked from the tanks and leached into the soil, creating what’s known as petroleum brownfields. Remediation must be performed to remove the ground contaminants, and this can make repurposing a gas station time-consuming and expensive.
Unfortunately, state and federal funds that are available to clean up petroleum brownfields are limited. Luckily, the onus is on the owner/operator to clean up the property, according to federal regulations. Nevertheless, it’s a lengthy process that could take years. In many cases, the cost of remediation work exceeds the cost of the property itself. Though it’s not the buyer’s responsibility to handle cleanup, potential investors and entrepreneurs may still be wary of problems cropping up in the future. Regardless, if you’re dealing with an abandoned site, you may be responsible for the cleanup if you purchase the property. Fortunately, you can borrow funds to perform remediation work and clear the site of contaminants (see more on that below).

Use Restrictions
Despite their prime locations in busy areas, gas stations and the properties they sit on can’t always accommodate the stuff of entrepreneurs’ dreams. Many of these properties aren’t even large enough to allow for a small restaurant, let alone an office building, so their uses are sometimes limited. Of course, some gas stations include large retail service centers, so their footprints are large enough for restaurants, coffee shops, and office spaces. Regardless of your vision, you’ll want to ensure a risk assessment is properly performed to confirm that the property is safe for your proposed use. Plan to spend perhaps $10,000 to $15,000 on due diligence and investigative consulting work, contract evaluation, and more.

Around 150,000 gas stations are operating in the U.S., nearly 53,000 fewer than in 1994, according to the National Association of Convenience Stores and National Petroleum News estimates. Shown here, Nomad Pizza, which has become one of the most popular restaurants in Princeton, N.J. The original building dates back to the Modernist 1930s. 

– Image and quote source: Building Design + Construction


Now that we’ve gotten the bad and the ugly out of the way let’s talk about the good! Repurposing gas stations have proven to be worthwhile and cost-effective endeavors that not only make investors and entrepreneurs money, but also enable them to revive high-visibility properties, revitalize the surrounding area, boost economic development, and bring new opportunities to the community. You may also find that oil companies that own defunct gas stations are eager to offload the properties and see them returned to productive use.

Selecting a New Use
What are your plans for the site? Perhaps you’ll open a trendy restaurant or wine bar, as many have done, or introduce an additional environmentally friendly slant by establishing your new site as an electric-vehicle-charging station. Many investors choose to play up the gas station ambiance with a themed store or coffee shop, styling their new properties with nods to the sites’ past lives. Perhaps you might leave the large bay doors from old service stations or stylize the architecture in such a way that its history is clearly visible. Need more inspiration? The EPA has developed a fantastic resource on this topic: Petroleum Brownfields: Selecting a Reuse Option.

Obtaining Financing
Once you’ve identified your use, done your due diligence, taken time to understand the risks and opportunities, and determined to move forward, it’s time to apply for a business loan. This shouldn’t, however, be the first time you contact your broker. Before you even begin your search, it’s important to get prequalified for gas-station financing. Once you’re prequalified, you’ll want to stay in touch with your broker throughout the property-search and change-of-use process to ensure your proposed plans are appropriate from a lending perspective. With regards to financing, here are your options:

SBA 7(a) Term Loan and SBA 504 Term Loan: with these loans, it’s possible to wrap in the costs related to site remediation and the addressing of appraisal issues.

    • Real-Estate Financing
    • Conventional Loans
    • Franchise Lending
    • Business Acquisition Financing
    • Equipment, Working Capital, and Inventory Loans
    • Renovation Loans

Due to the inherent risks associated with this type of property, gas-stationing financing can be challenging to obtain. And, as outlined above, a great deal of preparation and investigative work is involved. Because of this, it’s essential that you work with a broker who understands the nuances of this type of purchase and has a great deal of experience with this lending niche.

A good broker will explain all of your options, recommend the most appropriate lending avenues, and provide you with support and expertise as you go through the entire process, from pre-qualification to closing. Extra finesse is needed when you’re attempting to purchase neighboring lots to expand your usable property area, and this especially complex process requires the expertise of a seasoned business broker.

SBA vs. Conventional Loans
The advantage of SBA financing is that it is generally offered at favorable rates with reasonable down payments and long repayment terms. The downside is that approval can take a few months, and a lot of paperwork is involved. Conventional loans, on the other hand, can be more difficult to obtain. You’ll need excellent credit and healthy financials, as well as high-value collateral to put up against the loan. An experienced business broker can advise on the best loan for your situation.


Note: The featured image at the top is an Old Texaco Station in Los Angele’s Koreatown, which is Now a Drive-Through Coffee Shop With Vintage Vibes. Image courtesy of Los Angeles Magazine.

Now What?

We have plenty of advice available to business owners who are preparing to apply for gas-station financing or any other type of business financing, including how to build your business’ credit and prepare to apply for a business loan as well as the types of business loans that are available. Villa Nova Financing Group has extensive experience working with investors and entrepreneurs just like you who are looking to renovate a gas station. Ready to fuel your local economy by repurposing a gas station in your community? Contact us today!

  • Please tell us about the type of loan or financing you are exploring.
  • This field is for validation purposes and should be left unchanged.