SBA 7(a) Gas Station Feasibility Study in Illinois

Illinois fuel retail carries the heaviest cancellations

SBA's 7(a) program has approved 281 gas station and truck stop loans in Illinois since FY2017, worth $328.1 million, and the state is 5th in the country for the class. The class holds 8 of 39 places in the Illinois asset table. The thing to notice is attrition: cancellation reached 19.9% of FY2017 to FY2024 approvals, or 20.4% when undisbursed loans are counted. About one approval in five never turned into a funded loan, which is a larger drop than we see in many cells.

What happened after funding

Among the 125 loans that funded in FY2017 through FY2021, 7.2% have been written off to date, and 3.2% had gone inside five years of approval. Neither is a ceiling, because open loans may still fail. Together with the cancellations they say that fuel retail in Illinois is a business where the approval is not the end of the risk.

Size and brand

The median of $991,000 is 0.91x of the nationwide 7(a) figure, and a central band of loans is priced between $600,000 and $1.6 million. Franchised stations, including branded fuel and convenience concepts, account for 54.8% of loans. These are real estate-heavy deals: pumps, tanks, canopy, store and land. A band that high above a typical equipment loan shows that many borrowers are buying the site.

Lenders and counties

Byline Bank has 99 loans, well clear of Millennium Bank at 22 and The Huntington National Bank at 20. The names show current holders in SBA's file and imply nothing about any bank's rules. Cook County has 75 loans, Kane 36, Winnebago 19, McHenry 16, and DuPage and Lake 14 each. The peak was FY2021, at 52 loans and $61.3 million.

Limits of the code

The classification follows the borrower's industry. Travel centres and truck stops are mixed with stations lacking a store, and a site built mainly for electric vehicle charging has no industry entry of its own and so would not show up here as such.

What an Illinois fuel study has to test

Traffic is the base: vehicles per day, the share turning in, and the other stations within reach. After that, margins on fuel are thin and set by markets, so the store, food service and any car wash income must carry the loan. Environmental history is a major item, because tanks and soil can add large costs, and the study should show how they are insured and who bears them. Test the loan against the median of $991,000, show coverage of payments if fuel margins narrow, and expect the appraiser to value the site as an operating business.