Petrol station purchase

The situation

This is an anonymised composite reflecting a recurring pattern, not a specific settled transaction. An experienced retail operator agrees to purchase the freehold and operating business of an independent petrol station, including its fuel supply agreement and convenience store operations, from a retiring owner.

Why it's hard

Petrol stations carry environmental considerations most standard commercial property purchases do not, including underground storage tank condition and potential contamination history, which lenders and their valuers assess closely before committing to finance.⚠ The fuel supply agreement's terms and remaining duration also materially affect the business's value and its ongoing viability under new ownership.

How it can be structured

A commercial property loan secured over the freehold, assessed alongside environmental due diligence on the site's tanks and any contamination history, combined with a business facility against the convenience store and fuel margin income, is the standard structure; the exit is ongoing servicing from combined fuel and retail trading income. Lenders will typically require an environmental site assessment as a condition precedent to settlement, and the fuel supply agreement's terms, including exclusivity and pricing arrangements, should be reviewed by the buyer's lawyer alongside the finance process.⚠ Where contamination risk is identified, remediation costs or an adjusted purchase price are commonly negotiated between buyer and seller before the transaction proceeds.

Buyers should expect the incoming lender to want confirmation the underground tanks meet current state environmental standards, and where they are older, a staged testing or monitoring program is often built into settlement conditions rather than treated as an outright barrier. Some transactions are structured with a portion of settlement funds held in retention specifically to cover any remediation identified by further testing, released to the vendor once the buyer's own environmental consultant is satisfied no further work is required. The fuel supply agreement deserves the same scrutiny as the finance itself, since a contract locking the site into unfavourable wholesale pricing or an inflexible term can constrain trading margins for years after settlement regardless of how well the property loan itself is structured. Where the convenience store trades meaningfully independently of the fuel offer, some buyers structure separate facilities for each component, financing the freehold and fuel operation on one set of terms while the retail business is assessed and funded on its own trading merits, giving the lender a cleaner view of each income stream.

What it typically costs

Pricing reflects the environmental and supply-agreement considerations specific to this asset class, quoted on enquiry once a lender has reviewed the environmental assessment, the fuel agreement and trading financials. Costs include the environmental assessment itself alongside standard commercial property and business lending fees.

Timeline

1. Same day — scoping call confirming the property, fuel supply agreement and trading financials.
2. 10–15 business days — environmental site assessment and legal review of the supply agreement.
3. 5–10 business days — lender matching and submission.
4. 10–20 business days — credit approval and offer, subject to environmental findings.
5. 5–10 business days — settlement.

Questions we'd ask you

1. What is the age and condition of the underground storage tanks, and is there any known contamination history?
2. What are the remaining terms of the fuel supply agreement, and does it transfer to a new owner?
3. What has the combined fuel and convenience store trading performance looked like recently?
4. Has an environmental site assessment already been commissioned?
5. What relevant experience do you have operating a fuel retail business?

Related

Commercial property loans · Unsecured business loans · Business owners · Going concern