Convenience Store Loans: Best Options to Consider in 2024

Convenience stores Running a convenience store requires keeping up with new inventory trends, changing customer demands, government licensing requirements, and unexpected expenses while still trying to make a profit.

Convenience store owners don’t have to manage all of this on their own. Alternative small business lenders are happy to provide financial help to cover costs of inventory restocking, store remodels, licensing fees, equipment purchases, and other necessary expenses. 

Figuring out how to secure a convenience store loan can be challenging, especially if this is the first time you’ve ever needed small business financing. In this review, our experts highlight the terms, fees and rates of each lender and explain what makes them a good option. We also share potential downsides of each lender, and provide a rating methodology you can use to select the best option for your needs.

Best Convenience Store Loans for 2024 - Full Overview

In this section, you’ll find detailed descriptions of the various convenience store business loans including pros and cons, loan features, and common uses.

How to Choose The Best Convenience Store Loan

• Loan Features: The most important factor to consider when shopping for loans is the features they offer, including loan terms, repayment options, and loan amounts. For example, if you need to borrow $100,000 to purchase shelving, refrigerators, cash registers, coffee machines, a walk-in freezer, and other equipment, there’s no point in applying for a microloan that tops out at $25,000.
• Application Process: The application process can sometimes seem invasive with lenders requiring massive amounts of documentation and taking forever to make a decision. To simplify the process and save time, select lenders that make it easy to apply, offer preapproval with a soft credit pull, and disburse funds quickly.
• Interest Rates and Fees: How much the lender charges in interest rates and fees will affect the amount you must repay over the lifetime of the loan. Look for lenders that offer competitive APRs and reasonable loan origination fees to save yourself money.
• Qualification Process: It’s also important to consider the qualification process when comparing loans. Make sure that you meet the minimum requirements for personal credit score, annual business revenue, and time in operation before applying.
• Customer Support: At some point during the life of your loan, it’s likely you’ll need help from customer service. But what happens when you can’t get through to a CSR? To prevent this from happening, check if the lender offers multi-channel support and access to a live representative. It’s also helpful if they provide supplemental information via blog posts, FAQs, and a help center on their website.
• Online User Reviews: It’s a good idea to check reviews that other borrowers have left, especially on independent review sites like Trustpilot. Read through user comments to see if the majority of customers report having a positive or negative experience with the company before making your selection.
• Perks and Bonuses: You should also consider additional factors when selecting a lender, such as payment flexibility, advertising transparency, and advanced technology. For example, don’t bother working with a lender that only accepts payment by mail; select one that offers the convenience of paying online or through an app.

The Convenience Store Marketplace in the United States

To help you gain a better understanding of the convenience store marketplace, here are some key statistics about the industry, its outlook, and potential areas of growth. To help you gain a better understanding of the convenience store marketplace, here are some key statistics about the industry, its outlook, and potential areas of growth.

Recent Convenience Store Statistics

There are currently more than 150,000 convenience stores in the United States. Though many people automatically think of chain corner stores with big names like 7-eleven, Speedway, Casey’s, and Pilot Flying J, the vast majority of convenience stores are independently run.

Operating a convenience store can be very lucrative; the average amount of in-store sales equals $1.62 million dollars for each convenience store in the United States. A large portion of that income is from sales of cigarettes, beer, and other beverages. Nationwide, corner stores were responsible for selling more than $56 billion in cigarettes in 2020. The second hottest sellers are beer, ale, and alcoholic cider, which bring in over $23 billion per year. Even hot dispensed drinks sell well, with convenience store sales reaching $5.78 billion during 2020.

Convenience Store Industry Outlook and Areas of Growth

Americans are busier than ever. And while that may be bad news for our schedules, it’s good news for convenience store owners; the busier we are, the more likely we are to seek out convenient ways to get the products we need. That’s one factor that makes the industry outlook for convenience stores so promising. In fact, the convenience store market is expected to grow by 2.4% in 2022 alone, with the greatest area of growth predicted to be in urban areas.

What are the Costs of Running a Convenience Store?

If you’re considering buying a convenience store but aren’t sure how much capital you’ll need, here’s a quick guide to help you get started.

Convenience Store Start-Up Costs

• Leasing the Appropriate Space: One of the first expenses you’ll need to cover is the cost of commercial space. While leasing is certainly more affordable than purchasing, you’ll still need to put down a security deposit, which could equal up to $8,000.
• Remodeling the Interior: Assuming that the commercial space you’re leasing isn’t already designed for a corner store, you’ll need to factor in funds to redo the interior; this could run you up to $10,000.
• Equipping the Store: You’ll also need to purchase a wide range of equipment for your convenience store, including commercial display cases, refrigerator units, shelving, beverage dispensers, hot food holders, and microwaves. This will likely cost you $20,000 to $30,000 or more.
• Purchasing Initial Inventory: Once you have your shelving, display cases, and dispensers ready, you’ll need products to fill them with, which can cost around $15,000
• Acquiring the Required Licenses and Permits: You’ll need to get the proper licenses and permits to open your convenience store; these are especially essential since you’ll be selling alcohol and tobacco products. Overall, these costs should run you $2,500.

On-Going Costs for Convenience Store Operation

• Making monthly lease payments: You’ll need to make monthly lease payments, which could total between $6,000 and $10,000 depending on the size of your convenience store and its location.
• Paying utilities: You’ll also have to factor in utility payments, which can reach $1,000 per month.
• Marketing Your Store: Don’t forget to let the world know you’re in business; you should budget around $1,000 per month in marketing costs.
• Replenishing stock: Every month, you’ll need to replenish stock that’s been purchased, which can run anywhere from $5,000 to $8,000 per month.
• Compensating employees: You won’t be running the store yourself, which means you’ve got to pay employee wages; these can total between $10,000 and $15,000 per month, depending on how many workers you hire and their hourly pay.

How Can You Use Convenience Store Loans?

If you want to buy a convenience store and you’re wondering how financing options can be utilized, keep reading; in this section we’ll discuss some of the most common uses for convenience store loans.

• Real Estate: Whether you’re buying or leasing real estate for your convenience store, business loans can be used to help you cover the cost of acquiring the space.
• Franchise Fees: Becoming part of a franchise can help your convenience store achieve instant recognition and bring in more customers. This does cost money, however—around $25,000 upfront—but you can borrow capital to cover the payment.
• Equipment: Another common usage for loans is equipment; you have to buy a lot of refrigerator cases, product shelving, drink dispensers, and cash registers to open a convenience store.
• Expansion: Experienced convenience store owners often take out loans to help them build another store or expand their current business.
• Inventory: It’s also common to use borrowed funds to cover one of the biggest ongoing expenses convenience stores incur—the cost of inventory.
• Marketing: While you might like to think people will flock to your store as soon as it opens, the reality is you’ll need to advertise your store to ensure success. Thankfully, you can hire a marketing firm using convenience store loans.
• Day-to-Day Expenses: Borrowed funds can also be used to cover the day-to-day costs of doing business and to pay for unforeseen emergency expenses, like replacing a broken window or fixing a failing air conditioner.

How to Qualify for a Convenience Store Loan?

While it’s not possible to guarantee you’ll successfully qualify for a loan, there are steps you can take to improve the chances of being approved. They are:

• Have a Business Plan: The first thing you need to do is to create a business plan. This step is especially important for newcomers who want to buy a convenience store and secure funding, but they’re not sure how. By drawing up a business plan, you’re creating a road map to guide the creation and growth of your business; this also signals to lenders that you’ve thoughtfully considered the challenges associated with buying a convenience store and come up with solutions.
• Track Your Revenue and Expenses: Once you open your convenience store, you need to keep track of all your revenue and expenses; you’ll be required to submit these financial documents to lenders demonstrating your ability to repay loans.
• Pay Your Debts on Time: One of the key qualifications for a corner store loan is a good credit score, which comes from paying your debts on time. Though financing is available with bad credit, your chances of being approved improve the higher your score is.
• Know Your Needs: If you want to be approved for a loan, it’s vital to know exactly what you’ll be using the funds for; this is a question you’ll likely be asked during the loan application process. If you’re purchasing equipment, get estimates before applying to increase the odds of approval.
• Apply Selectively: It’s unlikely that you’ll meet the qualifications for every convenience store loan on the market. Check the requirements for credit score, time in business, and annual revenue then apply only if you meet the minimum qualifications.

Conclusion

Owning and operating a convenience store is an exciting opportunity; the market for corner stores has been growing steadily and shows no signs of stopping! Unfortunately for store owners, the typical profit margin at corner stores is rather slim, which makes it easy to run into cash flow problems. Thankfully, there are many convenience store loans on the market to make sure capital is available whenever you need it.