Gas Station Feasibility Study in Tennessee

Big tickets, many that do not close

Tennessee gas station and truck stop lending combines large loans with a high cancellation rate. The median loan is $961,000, or 0.91x the median for gas stations nationally, and the state file records 63 approvals between FY2017 and FY2026 totaling $69.6 million. The class ranks 26 of 53 among states and 11 of 39 among Tennessee asset types, with a 0.83x location quotient indicating a somewhat thinner share than the national mix. The pattern to notice is cancellation, at 23.1% or more for the FY2017 to FY2024 vintages with an identical 23.1% ceiling. Fuel retailers often have to line up real estate, environmental reports and franchise approvals, and a good many deals fail along the way.

Lenders, programs and geography

Half of the approvals run from $589,500 to $1.5 million. The 7(a) program supplied 58 loans and 504 supplied 5, and franchise brands account for 23.8% of the loans. Pinnacle Bank leads with 9 loans totaling $12.1 million, Citizens Bank has 8 totaling $10.7 million, and Celtic Bank Corporation has 7 for $6.7 million, so the leaders are in a similar size range. Shelby County leads geographically with 14 loans, Davidson County follows with 6 and Knox County has 4, while Fayette, Hamilton and Weakley counties have 3 each. The year counts run from 2 loans in FY2024 to 12 in FY2021, while FY2021 reached $13.3 million and FY2026 shows 4 loans for $8.2 million.

The cohort of FY2017 to FY2021 disbursed loans holds 30 loans, just at the line for a published rate, and the charge-off floor reads 0.00%, with the early-default tally also at 0.00%. A sample that small can hide a single loss, and loans still open can fail later. The industry code classifies the borrower's business. Travel centers and truck stops sit inside the same code as other fuel retailers and cannot be pulled apart, and charging stations are absent from the 2022 industry index, so a project built around charging is invisible here.

Questions the study must answer

Any study of a Tennessee gas station has to start with traffic and site: interstate or arterial exposure, access, and the count of competing stations along the same road. Fuel margins are thin, so the plan must rest on inside sales, food service and the brand's supply terms, and it must account for tank and environmental liability, which can sink a purchase. Cost testing should compare land, tanks and building with a typical loan near $961,000. Debt service coverage ought to hold with lower fuel volume, and the 23.1% cancellation floor argues for settling the environmental review and the brand agreement before the loan request. An appraiser will treat the land and the operating business as two values, so the study should supply gallons sold and inside sales history.