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How to Get a Loan to Buy a Convenience Store?

There’s no doubt that the convenience stores dotted across the nation have proven to be lifesavers. Many trips are saved with ready-to-eat food and clean restrooms. They are also a good investment. Even in 2020, convenience store retailers in the U.S. reached $255.6 billion in sales. However, before you can see such success, you need to buy a convenience store somehow.

In this guide, we will cover what you normally need to successfully apply for a loan and we’ll explore all of the available conventional and alternative financing options so that you can determine the best choice for you.

Find Out What You Need to Apply for a Loan

You need to be aware of what you need to know about your business as it stands right now, what it needs, and your future plans for it, to save you time and frustration. The following are factors to be aware of and to have documentation for:

  • A Business Plan
  • Expenses and Revenue streams
  • Your Business and Personal Credit Scores
  • Your Business History

As the soon-to-be owner of a convenience store, you follow the criteria as a small business. While this allows you to apply for small business loans, as we will discuss in more detail later, it also means you will need to have a detailed business plan ready for your investors. It gives them more peace of mind as they invest in your store because they can see that you are organized and have a clear direction for your company.

A deeper part of that organization is clear documentation of your regular and particular costs, your profits, losses, and your revenue. This will show the lenders the current state of your affairs so that they know whether you are a risky investment.

Still, even if your current affairs aren’t appealing, you can make a good first impression with a decent business and/or personal credit. Your score tells investors how well you pay your bills on time, the amount of debt you currently have, and the number of inquiries that have been made about your credit. Any way you can improve your score before you intend to seek financing will increase your odds of being accepted.

Lastly, for those of you who have another business and want to own a convenience store, investors will want to see how well you have managed your current business(es). It will allow them to better see your experience in business management in general. The more information you can present, the better.

Determine What Kind of Loan You Need

The confusion you experience surrounding convenience store business loans often comes from not fully understanding what kind of loan you need. Some loans have shorter wait times, which are good if you need financing soon. Others are willing to provide all the financing you need, but only in exchange for decision-making control, or equity, in your business.

In order to know which loan suits your needs best, it will help to ask yourself questions such as the following:

  • How much funding do you need?
  • How soon do you require financing? As soon as possible? In the near future?
  • Who are your customers? Does your convenience store have the appeal to attract them?
  • What is the maximum interest rate you can include with your regular payments?
  • How will your business pay for the loan repayments each day, week, and month?
  • What is the current state of your personal and/or business credit score?
  • Are you willing to relinquish your business’s equity in exchange for funding?
  • Do you want the experience of an investor or are you confident with just a loan?

Once you are aware of how much capital you need to acquire your convenience store, how much you can reliably pay back each repayment period, the maximum interest rate you can take on, how much help you need with your business, and have your information and documentation in order, you can finally begin to find the loan you’re looking for.

Pick Your Loan

Among the variety of funding options available to you, they boil down to either traditional debt financing, alternative equity financing, or creative financing. There are more options in each besides the following that would help you with necessary improvements or working capital after the purchase of your commercial real estate, but we’re mainly concerned with the options you can use to actually acquire your convenience store.

Traditional Debt Financing

Debt financing is what you might normally think about when you think of a loan. You are given a sum of money that you are expected to pay back in addition to accumulated interest in an agreed amount of time. Bank loans and lines of credit are examples of debt financing.

Bank Loans

These are the first traditional debt choice. They have an average interest rate attached that range between 3-6% and normally take only 2-4 weeks to be processed. However, you are often expected to pay off these loans within 5-10 years. That’s a short amount of time to pay back potentially $500,000 with interest.

A bank loan is an excellent choice if you have an excellent credit score or at least a score of 680-700, but they aren’t particularly viable for the acquisition of commercial property. Rather, low-cost financing or the higher financial needs of companies that are already established are their areas of expertise.

The surest candidates to be accepted for a bank loan are those who have at least two years of experience successfully running a business with high revenue, have a high credit score, and will have a store with promising profitability. Be aware they will require the most documentation.

Small Business Loans

This is not a viable option if your convenience store is your first business. The SBA is more ready to supply small business financing than banks and can give you up to 15 more years to pay off the debt. However, they have slightly higher interest rates between 7-10% and take between 2-4 weeks to process your request. If you’re approved, it can still take  3-4 months to receive the financing.

They’re a good second option if you don’t qualify for a bank loan, but it’s not uncommon to be declined unless you’ve already been an established business for at least 2 years and have a minimum 650 FICO credit score

The relevant SBA loan for you is an SBA 7a loan or 504/CDC. They allow you to purchase existing real estate or new land and begin construction for your store. The documentation you’ll need is 2 years’ worth of,

  • Price-sales ratios (P/S)
  • Corporate ownership documentation
  • Balance sheets
  • Cash flow statements
  • And leases

The SBA can lend you as much as $10,000,000 but will require a 10% down payment and some kind of collateral. Usually, this collateral is the property or equity of the property.

Commercial Real Estate Loans

These mortgages will provide between $250,000 to $5,000,000 exclusively for commercial properties, including retail.

They have the shortest approval time at 24 hours, funding in a week, and are easier for upstarting convenience retailers to obtain because they only require 12 months of operation with at least a 700 FICO credit score.

The term limit you’re given to pay the debt depends on whether you apply for a fixed loan or hybrid. A fixed loan will be given a term between 10-30 years while a hybrid will have 5-7 years.

The interest rate will vary between 2.2% and 18% but at South Florida Funding Group we normally assign an interest rate of only 6.375%. The documents you may be asked to bring are,

  • A completed loan supplement form
  • A tri-merge credit report
  • 12 months of business bank statements

If you’ve been in business for 2 years or more you may need 2 years’ worth of tax returns and operating statements.

Term Loans

These loans have the most varied terms. It’s the best option if you need financing for your convenience store as soon as possible for its faster processing times and fewer requisites. You can even receive funding the same day you apply.

The terms of the contract will vary based on whether you’ve chosen a medium-term loan or a short-term loan.

Short-term have the lowest requirements and are the best for start-ups with bad credit, but have interest rates on the higher side and shorter repayment terms. Medium-term are more like SBA or bank loans. They will have a lower interest rate and tend to give you more time to pay the debt. At the very least, you will need a 550 credit score and proof you’ve been in business for at least 9 months.

Once you receive your money, you’ll be given between 3 months and 5 years to repay the debt at 3-30% interest. This option is risky, but if you have bad credit and need the money soon, this is still a viable option. If you’re accepted, you may receive up to $600,000.





Alternative Equity Financing

Equity financing is a form of alternative financing where instead of borrowing a sum of money that you pay back over time, you are effectively selling equity in your company - the decision-making power in your business. This places you in a partnership with your investor(s).

Angel Investors

Even for convenience store retailers, there are angel investors. Angel investors are private investors who assist small and start-up companies in exchange for equity, even before your business starts to produce profits.

The amount that you can receive from an angel investor will vary according to the monetary means of the individual investor. However, as you are selling part of the right to make decisions for your company, find out if you and your potential investor are a match by figuring out,

  • If you both have a similar vision for your company
  • If they have business practices that go against your own
  • If they have the experience you need to guide you.

Also, be aware that while angel investors are certainly more interested in start ups and small companies, they are investors none-the-less and are looking for businesses with high potential and intend to grow quickly. Organize your business plan and iron out the finer details of it to have your best foot forward.

This isn’t a quick alternative financing option. It takes time to find the angel investors, sift through until you find the most promising, and come to an agreement.

Venture Capital or Venture Debt

Venture capital comes from venture capital firms, which are, in their fundamental sense, a group of angel investors. It’s another good way for start-ups to receive financing for their venture while speeding up the process of searching for the right angel investor.

They work by lining up suitable investors for you who will provide the capital you need in exchange for equity in a series of “equity rounds.” In between these rounds, you might need to apply for debt-based financing venture capital.

This debt capital isn’t available through the venture firms, but through venture debt lenders such as banks and business development companies (BDC). The terms are similar to medium-term loans but with 3-5 year term lengths.

By mixing venture debt-based capital with the equity rounds, you will avoid selling the ownership to your business entirely.

Alternative Creative Financing

Lastly, creative funding is a form of alternative funding options that don’t normally require repayment. However, while it is theoretically possible to receive the funds necessary to obtain your commercial property this way, it’s rare and unreliable.

These options, such as crowdfunding, small business grants, or your friends and family are normally chosen for smaller capital needs such as equipment financing or property repairs.


You may have noticed that to obtain the financing you need to acquire your store, you need to be in business for a certain amount of time. This complicates things if your convenience store is your first business. Don’t worry, first focus on the start-up friendly options we’ve listed.

For help on where to go after that, or for answers to all of your alternative funding and convenience store business loan questions, you can receive more expert help through our trained team at South Florida Funding Group. We’ll keep things clear for you and we may even have the financing solution you need.


The business funding you need when others say No!.

2569 Bay Pointe Dr.
Weston FL 33327




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