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Convenience Store Financing

Convenience Store Business Loans

Loans and financing options for Convenience Stores

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Convenience Store Financing

A convenience store is a business that is growing more influential over the years and the growth is expected to continue in the coming years as well.

Loans Offered To Convenience Stores

In simple words, a convenience store can be defined as a retail establishment that stocks everyday items like beverages, snacks, magazines, newspapers, tobacco products, groceries, beer, and other household items.

Convenience stores are treated as a faster alternative to supermarkets when people want to make a single-item purchase for immediate consumption.

The location of the convenience store is what actually gives meaning to its name “convenience store”. Although quick transactions and extended operational hours are important, location is the first priority. You find convenience stores on highways, at suburban intersections, around travel hubs, and near densely populated areas.

About 80% of the convenience stores in the country offer motor fuel. In fact, the sale of motor fuel contributed 50% of the convenience store sales in 2015. Convenience stores often partner with famous food franchises for making one-step refreshment hubs.

inventory loan

Purchase Inventory Stock

  • Business loans for convenience stores allow you to replenish inventory stock quickly
  • Use a working capital loan to purchase inventory in bulk while costs are low


Modernize Your Convenience Store

  • Create a clean, modern look in your convenience store
  • Update appliances like refrigerators and upgrade store displays


Pay Everyday Expenses

  • Cover the cost of recurring expenses like payroll, expenses, and materials
  • Pay your convenience store’s rent, utilities and taxes to keep the lights on and water running


Expand Your Store to New Locations

  • Expand your store to a larger location or open a second store in a new area with a business loan
  • Bring on additional staff with extra working capital funds

Qualifications for Unsecured Loans

6 Months in

Fico Score Over

Equipment Quote
From a Vendor

How to Apply

Securing the funds your business needs in order to continue running smoothly is easy with financing options from Fundrly. Our application process is easy, fast, and secure. In only a couple of minutes, you can apply for a customized loan for your small business.
After you finish applying, one of our loan specialists will contact you so we can learn a little more about you and your business. Your loan specialist will help answer any questions you have about the loan process and help you determine which loan is the right fit for you and your business. Our high approval rates and quick decisions make it easy for you to get back to running your business.


Why Fundrly

When looking into the needs of your store or business, you want to work with a lender who has experience in working with convenience stores before. At Fundrly, we understand that receiving funding for a convenience store can be difficult. As a store owner, you occasionally have to wait for consumers to pay for their orders and for their payments to clear. Convenience store business loans from Fundrly do not require drawn-out paperwork. Speak with one of our friendly, expert loan specialists to get more details about our business loans.

Convenience store business loan

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We have experience in supporting convenience store business owners

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Influence of Convenience Store Marketplace In The US

According to the report of the National Association of Convenience Stores, there were 154,958 C-stores in the US in 2017 and they accounted for $550 billion in annual sales for that year. This recent report released by Nielsen Convenience Industry Store Count mentions about a 0.3% increase in store count when compared with the previous year.

Single store operators account for about 63% of the total convenience stores in the US.

Strong Growth of Individual Stores

While the growth in the number of convenience stores is slowing down, their product sales still keep growing at a robust pace. That is good news for anyone planning to start a new convenience store or buy an existing franchise or store. The average annual revenue per convenience store has reached up to $1.5 million.

Multiple Growth Areas Available For Convenience Stores

Convenience stores do not focus on the sales of ready-to-use consumer products alone but they also offer services like phone cards, money transfers, and limited-use cell phone plans. Lottery ticket sales also play a role in building the revenue base of convenience stores. However, the sale of packed beverages, tobacco products, snacks, and beer tends to dominate, when it comes to convenience stores.

You cannot ignore the share of tobacco product sales in the selling business of a convenience store. Electronic cigarettes and vaping products prove to be big growth areas for convenience stores. Because the products often come at high price rates, stocking them up can be a costly process.

Risks of Operating Convenience Stores

Because convenience stores are mostly located in high traffic areas and usually hold a significant amount of cash, there is an increased chance of theft and fraud.

In addition to that, the sales of tobacco products, lottery tickets, and alcoholic beverages are subject to strict regulations. The failure to adhere to the regulations could lead to revocation of license, fines, criminal liability, or in some cases, a combination of these. If you have stocked these items for sale, it is important to have awareness of the responsibilities associated with selling them and also maintain proper insurance.

Finally, as many convenience stores sell perishable foods, they are obligated to follow the regulations of the local health department and use the utmost caution in preparations and inventory to avoid spoilage and associated losses. Already established convenience stores would have a better idea about managing spoilage but new operators may have to incur additional costs for the same.

Loans for a Convenience Store

There is no denying that the growth rates of convenience stores are quite promising but traditional bank loans for convenience stores are still difficult to get. Banks still remain the largest source of business loans but only 25% of all the loan applications get approved. In the view of small businesses, it is still a competitive borrowing landscape. Getting financing for your convenience store through traditional bank loans is not impossible but it is not going to be that easy.

If you are one of the 75% of the business owners that are denied a traditional bank loan, how do you finance your new convenience store?

When we analyze the lending environment ten years ago, you will realize that the present environment seems promising. Now convenience stores have more loan programs and non-bank lenders to depend upon for financing. It is important to understand that banks are subject to strict guidelines and just because a bank rejects your loan application doesn’t mean you are not eligible for a business loan. You just have to find the appropriate source.

How Do You Decide That You Need Convenience Store Financing?

The DSCR (Debt Service Coverage Ratio Calculator) will give you an idea about how a lender will view your application for a convenience store loan. DSCR basically estimates the ability of your business to repay the loan. It is important for the lender as well as you, especially before purchasing a business.

Top Solutions for Convenience Store Acquisitions

Acquiring an already-established business can prove advantageous while applying for a convenience store loan. The success of your convenience store can convince your lender to provide you financing. The chances of repayment are more when you lend to a business that is profitable in a growing industry.

Small Business Administration Financing

SBA is top-tier financing. The SBA doesn’t provide these loans directly; instead, it guarantees a portion of the loans for its partner lenders. Highly favorable loan terms and rates are the attractions of SBA loans. The SBA offers up to 85% guarantee to a loan, thereby giving confidence to the lender to offer higher loan amounts and favorable repayment terms.

Traditional Bank Loan

If you have extensive experience operating a c-store and the acquisition that you have planned has high DSCR, then you may get approval for a traditional bank business loan. Bank terms will not be as favorable as SBA loans but they aren’t that bad either.

Rollovers as Business Startups (ROBS)

ROBS allows you to make use of funds from a qualified retirement account. For instance, a 401(k) or an IRA, and then roll these funds into your company. This is not usually regarded as borrowing from your retirement account. Moreover, entrepreneurs are able to use their business as a tax-deferred investment.

Seller Financing

When buying an existing convenience store, you may be provided financing by the seller itself. In return for the full purchase amount, the seller may agree to finance full or a part of the buying price.

Ways for Convenience Store Inventory Financing

Starting a convenience store will require a considerable amount of your financial resources but failing to stock items that are in demand will affect your business adversely. Convenience stores have a close relationship with the weather and stocking seasonal items in plenty will help improve your sales.

Have enough seasonal inventory when the demand is at its peak. For example, if it is winter, you should have wood bundles, cold remedies, ice scrapers, ice melt, and cold weather treats kept in stock. If it is summer, stock frozen treats, sunscreen, sports drinks, coolers, beach umbrellas, and allergy aids.

As we have mentioned before, the vaping and E-cigarette marketplace is experiencing exponential growth and it will likely reach above $47 billion annually by the year 2025. It is costly to stock vaping supplies, but their price margins may be the highest among all inventory in that store. E-cigarettes and vaping supplies are must-have items in a convenience store.

Merchant Cash Advance

In a merchant cash advance, the convenience stores owner is granted a lump sum advance and he/she pays back the advance amount through regular payments on a daily, weekly, or bimonthly basis. The repayment terms are determined by the percentage of the credit card sales of the store and its other business receipts.

Business Line Of Credit

A business line of credit can be simply considered a combination of a business credit card and a loan. Just like a business loan, an unsecured line of credit offers business financing that can be used for taking care of general business expenses. However, there is no lump sum disbursement in the case of a line of credit and the owner borrows only what he needs and pays interest for the same.

Unsecured Business Loan

In the case of unsecured business loans, the borrower does not require to pledge collateral including equipment, inventory, and real estate. The borrower’s creditworthiness is the sole factor that is taken into account to approve loans of this kind.

Popular Options for Real Estate Financing

Deciding whether to rent or buy is the biggest decision when it comes to operating a convenience store. As the location plays a crucial role in the success of the convenience store, everyone would be interested to consider the ownership of the land and the building on which the store runs.

Renting could be a good option. If you can manage to get long-term leasing with options for renewal and if the rent charges are less than the monthly repayment amount of a real estate loan, renting is a better option. Having more disposable cash every month means you can use it for employee training, buying inventory, and expansion.

Ask yourself these questions: Does the purchase make any financial sense? Is the property purchase affordable? What is your Debt Service Coverage Ratio? If you have decided to go on with the purchase, below shared are some real estate financing options.

Commercial Bank Loans

It is best to start with the bank where you have business accounts if you are seeking a loan. Banks are popular financing sources for real estate financing and they mostly offer the best terms for financing your real estate purchase.

SBA 504 Loan

The SBA has launched many programs that are intended to help companies acquire the real estate that their business occupies. The small business has to comply with federal size standards and have at least 51% of the real estate asset in possession. The sales of the business should not cross $6 million or have more than 500 employees.

Top Options for Expansion Of Convenience Stores

Convenience store revenue grows on a per unit store-by-store measure. This is due in large part to the expansion of service and product offerings. Opening franchise food stores adjacent or within your store is a common trend in convenience store expansion. The franchisors of some top food brands are designing smaller, express type franchise models attached to c-stores.

Franchise Financing

If you have plans of adding a franchise operation to your convenience store, the first financing option you would think of is a franchise loan.

When you purchase a franchise, you are licensing the franchise’s brand, proven business practice, and marketing. Successful franchises have great expertise in site location planning, which can help your business sales. The collective buying power with all other franchisees in acquiring inventory can be beneficial because it helps bring down your costs.

Business Line Of Credit

Convenience store owners prioritize a business line of credit. It is ready capital that can be used immediately at times of need. Convenience stores have to keep track of the emerging trends and react to them. This is only possible if they have quick access to capital.

Merchant Cash Advance

A merchant cash advance can be a good option for convenience store owners and it is not a loan. The financing is granted through a specialty financing provider or card payment processor and the proceeds generated from credit card sales are used to repay the borrowed amount.

It is important to note that a merchant cash advance often comes with higher fees and costs when compared with other types of loans. Establishing credit lines at the earliest is very important to ensure the stability and profitability of any business.

Working Capital Financing For Convenience Stores: Top Sources

From the previous paragraphs, it is clear that running a convenience store requires you to stay current with seasonal changes, consumer demands, and upcoming trends. Having working capital on hand can contribute a lot to the success of your business.

Failing to ensure adequate working capital is one of the biggest mistakes that many business owners make. The proper time to secure working capital is when your business is thriving. This is because banks and lenders would analyze how well your business is performing before providing you financing. You should never wait until your business is desperately in need of funding.

SBA Loan

It is often overlooked but the SBA (Small Business Administration) offers several loan programs to provide working capital to business owners. It means you can use the loans for any business purpose.

Business Line Of Credit

A business line of credit has to be part of every small business financing and its importance cannot be stressed enough. A business line of credit can be considered standby cash that is ready when you need it. The advantage is that you do not have to pay interest until you use the credit line. This is why a business line of credit is treated as a suitable financing option for fast-paced businesses like a c-store.

Business Credit Card

It has some similarities with a business line of credit and can help you make the best use of opportunities. Interest charges are not accrued on credit cards until you use them. In addition to that, most business credit cards offer cashback and rewards, thereby helping you get many benefits when buying items that


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