Using a Business Loan for Gas Station EV Charging Upgrades

The way people fuel their vehicles is changing. Electric vehicles (EVs) are no longer a niche segment. They're becoming part of everyday life. As EV adoption expands across the United States, gas station owners face a choice. They can adapt, or risk becoming obsolete.

For many gas station operators, upgrading an existing service station to include EV charging is a smart move. But installing EV charging infrastructure requires capital. Most gas station owners don't have enough cash on hand to pay for it outright. That's where a business loan for gas station upgrades, especially EV charging, comes into play.

In this article, we'll explore how a business loan for gas station can help business owners set up EV charging, what lenders look for, and how gas station owners can use financing to fuel long-term growth.

Why Gas Stations Should Consider EV Charging?

According to Experian, registered electric vehicles in the United States surpassed four million in 2024. In addition to growing as convenience, the U.S Government has also dedicated various incentives for EV adoption on a state and local level through rebates, bonuses, and mandates. With consumer demand increasing on all fronts, communities are now seeing an increasing need for convenient EV charging infrastructure across communities.

Drivers value convenience. They're likely to return to locations where they can charge their EVs while grabbing a snack from the convenience store, using the car wash, or buying essentials. For gas station owners open to innovation, EV chargers can attract new customers and generate new revenue streams. Therefore, a business loan for gas station EV charging upgrades would be a good source of capital.

Understanding the Costs Involved

Before we dive into financing, it's important to understand what EV charging infrastructure involves.

EV charging systems vary in cost:

• Level 2 chargers are typically cheaper to install.
• DC Fast Chargers, which deliver rapid charging, can be quite expensive, depending on power and installation complexity.

Apart from the cost of the EV charging system, the installation includes electrical upgrades, permits, utility interconnection fees, or construction costs. In many cases, electrical panels, transformers, and trenching work are necessary before installation.

Because of the high cost, most gas station financing strategies involve equipment financing, commercial real estate loans, SBA 7(a) loans, or combinations of different business loans for gas station upgrades.

What Is a Business Loan for Gas Station EV Charging?

A business loan for gas station upgrades is any loan that provides funding for improvements at your service station. This type of small business loan can cover:

• EV charger hardware and installation
• Electrical upgrades
• Site improvements
• Working capital while revenue ramps up

Gas station owners often treat EV charging as both a necessary investment and a strategic business upgrade. Positioning the project as growth-oriented rather than merely cost-centered can improve your chances with lenders offering a business loan for gas station owners.

Financing Options for Gas Station Owners

There are various funding options available for gas station business like loans, microloans, lines of credit, and more. Each of them have distinct features, eligibility, and terms that may suit different situations. Therefore, borrowers must assess their needs and accordingly choose a business loan for their gas station upgrades.

Below are some commonly used financing options for gas station owners:

1. SBA Business Loans

SBA loans are loans that are offered by private lenders but are partially guaranteed and backed by the Small Business Administration (SBA). This is why they are an attractive option for most small business and startup owners, as they often come with favorable terms.

SBA 7(a) Loan

• One of the most popular SBA loan program for small business owners.
• Can be used for equipment financing, working capital, real estate purchase, or to refinance.
• They generally have lower rates and typical loan amounts range up to a maximum of $5 million.

SBA 504 Loan

• Designed for commercial real estate and major fixed assets like EV stations.
• Offers long repayment terms and low down payment requirements.
• Works well when financing both equipment and real estate improvements.

2. Traditional Bank Loans

Some traditional lenders offer financing specifically for gas station loans, though terms vary widely. A traditional bank business loan for gas station often have stricter credit requirements, and lenders may want their borrowers to have strong financial statements, tax returns, and detailed business plans.

For commercial gas station loans, the interest rates and loan terms generally depend on:

• Credit score
• Cash flow
• Collateral, often the land or station equipment
• Debt Service Coverage Ratio (DSCR)

3. Equipment Financing

Equipment financing refers to a loan specifically meant to finance business equipment. In most cases, the equipment itself serves as the collateral for the loan. In the case of an equipment business loan for gas station EV charging, the charger itself may be the collateral. This can make it easier for gas station owners to finance EV charging equipment, especially if they lack extensive real estate assets for collateral.

Equipment financing often features:

• Shorter repayment terms
• Fixed rates
• Loans may be tailored to the life of the equipment

Gas station owners also have the option of equipment leasing if they do not wish to purchase a particular equipment. Equipment financing can help them lease EV charging equipment with convenience.

4. Business Line of Credit

A business line of credit provides flexibility to small business owners. Unlike a traditional loan with lump-sum funding, a line of credit lets you draw cash as needed. The interest is calculated only on the amount drawn. However, this interest rate can be higher than many other loan options.

This financing option can help pay for:

• Unforeseen EV installation costs
• Seasonal expenses
• Working capital during early operations

5. Online Small Business Loans and Financing

Some small business owners use other business financing options like:

• Small business loan for gas station from online lenders

• Refinancing existing gas station loan or company debt to free up cash

• Business credit card financing or MCAs for minor improvements (though they are both usually expensive)

Whichever path you choose, the primary goal is to manage cost while investing in infrastructure that's likely to generate future income.

What Do Lenders Look For?

When applying for a business loan for gas station upgrades, lenders will want to see evidence that you can repay. Common gas station financing requirements include:

• Good credit score (often 650+ for many lenders)
• Strong cash flow history
• Detailed financial statements and recent tax returns
• A solid business plan with projected revenue for EV charging
• Proof of existing real estate ownership or lease rights
• Environmental assessments (often required for gas stations due to environmental concerns)

While offering a business loan for gas station owners, lenders may also evaluate market factors like traffic counts, nearby competition, and projected EV adoption in your area.

Because EV charging infrastructure is a newer asset class, some lenders may request extra documentation or require a more conservative loan structure.

Government Incentives That Can Help

Federal and state incentives can reduce the net cost of EV charging infrastructure. For owners looking for a business loan for gas station upgrade to EV charging should also explore these federal incentives:

• Federal tax credits like Alternative Fuel Vehicle Refueling Property Tax Credit may cover a portion of equipment and installation costs.

• According to the U.S. Department of Transportation, there are several federal funding programs like the National Electric Vehicle Infrastructure (NEVI) Formula Program and the Discretionary Grant Program for Charging and Fueling Infrastructure under the Bipartisan Infrastructure Law (BIL). The government is planning several other funding initiatives as well as the Inflation Reduction Act (IRA).

• According to the U.S. Department of Energy, many states offer rebates or utility incentives for installing infrastructure for EV stations.

These incentives can work alongside a business loan for gas station upgrades by lowering your cash requirement and improving projected returns.

Conclusion

Installing EV charging infrastructure may feel daunting, especially if you're used to operating a traditional gas station. However, as the vehicle market evolves, so must fueling stations.

Using a business loan for gas station EV upgrades can spread the cost over time while enabling you to capture new revenue streams. Whether you consider an SBA loan, equipment financing, online small business loan, or another financing option, thoughtful planning can position your business for future success.

With proper cash flow management, solid planning, and a clear business case, investing in EV charging can help your gas station thrive in a changing energy landscape.