Case Study · Alabama · Gas Station & C-Store · SBA 7(a)
Gas Station Feasibility Study, Alabama — An SBA 7(a) Worked Case
This is how our independent feasibility study company and consultant team analyzed a new-build fuel-and-convenience project underwritten to an SBA 7(a) credit, from trade-area fuel and inside-sales demand through the debt-service coverage a lender must document. It is a representative, anonymized worked example of the methodology — not a specific client deal — set on a fast-growing suburban interstate corridor in an Alabama growth metro.
A ground-up pad on an Alabama interstate corridor.
A sponsor came to our feasibility study company with a ground-up fuel-and-convenience project and an SBA 7(a) lender that needed the projected cash flow independently tested before it would commit. The subject is a hard corner of roughly 1.6 acres on a suburban arterial feeding an interstate interchange, carrying about 26,000 vehicles per day, in a fast-growing outer-ring submarket of one of Alabama's growth metros. The build program is a 5,000-square-foot convenience store, 16 fueling positions across eight multi-product dispensers, and a co-branded quick-service restaurant (QSR) inside the store.
Because a gas station is a going-concern operating business rather than a passive real-estate play, the lender's question is not “what is the dirt worth” but “can this specific site generate the gallons, inside sales, and margin to service this specific loan.”4 Gas stations are also named special-purpose properties under SBA rules, which is precisely the condition that turns a discretionary feasibility study into an expected one on a ground-up deal.10 Our scope was the independent demand, capture, competition, and debt-service analysis that supports that credit.
Representative and anonymized. Every figure below is illustrative of a typical engagement of this type; the site, corridor, and parties are composited, not a real named borrower, address, or completed transaction.
Trade-area fuel and convenience demand.
The demand read starts with people and trips, not a capture rate applied to a traffic count. The three-mile ring holds roughly 34,000 residents growing about 2.5 percent a year, layered over strong peak-directional commuter flow toward the interchange.
Fuel volume is the primary value driver, and it correlates with, but is not set by, raw traffic. The national average fueling site sells about 2,500 gallons a day, but the distribution is enormous: top-quartile sites move more than 150,000 gallons a month.6 A new, high-capacity 16-position forecourt on a 26,000-vehicle interstate-feeder corridor with a growing residential base and a QSR draw supports a stabilized throughput near 2.0 million gallons a year — roughly 167,000 gallons a month, a defensible top-quartile placement rather than a flat percentage of cars passing by. The inside story matters more to the credit than the pump: about 57 percent of fuel customers come inside, the average convenience transaction ran roughly $12.13 in 2025, and prepared food carries the richest margins in the box.4 On the trade-area population, commuter capture, and store format, the model supports stabilized inside sales near $2.0 million a year and a foodservice/QSR line around $0.56 million.
| Demand driver | Basis | Supported figure |
|---|---|---|
| Trade-area population (3-mi ring) | ~34,000 residents, growing ~2.5%/yr | Rising captive base |
| Corridor traffic | ~26,000 vehicles/day, peak-directional AM/PM | Primary trip capture |
| Stabilized fuel throughput | Top-quartile suburban site (>150,000 gal/mo basis)6 | ≈ 2.0M gallons/yr |
| Inside-store sales | ~57% inside conversion; ~$12.13 avg ticket4 | ≈ $2.0M/yr |
| Foodservice / QSR co-brand | Prepared-food and branded daypart capture | ≈ $0.56M/yr sales |
Volume and inside-sales logic grounded in NACS fuel-volume distribution and in-store economics; see sources 4 and 6. Figures are illustrative of the engagement type.
An undersupplied corner as rooftops outrun forecourts.
Six competing stations sit within three miles, one of them within a mile, but the newest rooftops in the submarket are arriving faster than new fuel permits. The corridor is adding households more quickly than it is adding forecourt capacity.
| Competitor | Brand tier | Forecourt | Distance | Read |
|---|---|---|---|---|
| Competitor A | Major-brand | 8 MPD | 0.9 mi | Nearest; dated canopy, no QSR |
| Competitor B | Major-brand | 6 MPD | 1.3 mi | Cross-corridor, off-peak side |
| Competitor C | Regional chain | 10 MPD | 1.8 mi | Strong foodservice co-brand |
| Competitor D | Unbranded independent | 4 MPD | 2.1 mi | Price-led, thin inside sales |
| Competitor E | Major-brand | 8 MPD | 2.5 mi | Grocery-anchored pad |
| Competitor F | Regional chain | 6 MPD | 2.8 mi | Aging site, trailing-edge |
Competitive set surveyed for the engagement; anonymized. Announced and permitted supply was scanned, not just the standing set, consistent with institutional site-selection practice.
Only one competitor sits inside a mile, and it carries a dated canopy and no foodservice program — a weak defender against a new 16-position forecourt with a co-branded QSR and a growing captive base behind it. The nearest genuine foodservice competitor (Competitor C) is nearly two miles away, on the far side of the corridor's peak-directional flow. A rigorous study does not stop at the standing set: it scans announced and permitted supply so the capture forecast is not quietly overstated by new forecourts the trailing data cannot yet see.4 Here the read is a genuinely undersupplied corner — rooftop growth is outpacing new fuel permitting, and the subject fills the gap rather than splitting a saturated trade area.
Alabama macro: low-cost, in-migration-fed, market-set fuel supply.
The state backdrop is a quiet tailwind for a commuter-corridor fuel site. Alabama's roughly 5.16 million residents are growing almost entirely on net in-migration, and the state carries the lowest per-capita property taxes in the nation — a real advantage for a real-estate-heavy build.
Alabama held about 5,157,699 residents in 2024, with growth now driven almost entirely by net in-migration even as deaths outnumber births statewide; 41 of 67 counties grew, and the fastest gains are concentrated in the suburban interstate corridors of the growth metros.1 That outer-ring rooftop growth is exactly the demand engine a new forecourt needs. Decisively for retail supply, Alabama is a full Certificate-of-Need state, but CON governs health facilities — hospital and nursing-home beds — not fuel retail, so convenience-and-fuel supply is set by the market and local zoning rather than a state permit gate; the feasibility question here is competitive capture, not entitlement. A deep automotive and manufacturing base — Mercedes-Benz at Vance, Hyundai at Montgomery, the Mazda-Toyota plant at Huntsville, and Honda at Lincoln — anchors the commuter flows these corridors carry.3
Cost is the offsetting story, and it cuts in the sponsor's favor. Alabama carries the lowest per-capita property-tax collections in the country, an effective rate near 0.37 to 0.41 percent, which materially lowers the carrying cost of a land-and-improvements-heavy station; the trade-off is among the nation's highest combined sales taxes, near 9.46 percent, which the inside-store model prices into merchandise.2 On the capital side, a single SBA Alabama District Office in Birmingham services all 67 counties, 504 credits route through the Southern Development Council, and the most active 7(a) lenders in the state by 2025 dollar volume were led by Live Oak, Huntington, and Newtek; the July 4, 2026 decoupling of the 7(a) and 504 caps to $10 million combined enlarged bankable deal size.12 Underlying it all, gasoline demand is durable across a 10-to-25-year amortization but structurally flat-to-declining, so the model holds per-site gallons roughly flat rather than assuming a rising pump.8
Why the corner captures the corridor.
Household income, daytime population, and growth all point the same direction, and the intersection geometry converts that demand into trips.
The three-mile trade area carries a median household income near $68,000 — comfortably above the level at which foodservice and premium-fuel attach rates strengthen for an Alabama suburb — and a daytime population inflated by the outbound morning commute and the inbound evening return. The growth rate near 2.5 percent a year means trailing Census counts understate the captive base, a common outer-ring distortion a careful study corrects for rather than extrapolates.1
Geometry does the rest. The subject occupies the hard corner on the going-home side of a signalized intersection near the interchange, where peak-directional evening traffic decelerates and turns — the highest-conversion position on the corridor for both fuel and the impulse inside-sales and foodservice trip. A 16-position forecourt clears queues that would spill at a smaller site, and the QSR co-brand lengthens dwell time and lifts the inside ticket. The nearest competitor's dated, food-less site cannot match that capture, which is why the model credits the subject with a top-quartile throughput placement rather than an average one.
The SBA 7(a) structure.
Total project cost lands at $4.80 million. The 7(a) program can finance the business and the real estate in a single loan, which is why an owner-operated, special-purpose station routes here rather than to a fixed-asset-only 504.
| Cost component | Amount |
|---|---|
| Land (~1.6-acre hard corner) | $0.95M |
| Site work & utilities | $0.65M |
| Building shell (5,000 sf) | $1.05M |
| Fuel systems, canopy & MPDs | $0.80M |
| C-store FF&E | $0.50M |
| QSR build-out | $0.35M |
| Soft costs & contingency | $0.35M |
| Working capital & fees | $0.15M |
| Total project cost | $4.80M |
| Item | Figure |
|---|---|
| SBA 7(a) loan (85%) | $4.08M |
| Borrower equity injection (15%) | $0.72M |
| Term / amortization | 10-year term / 25-year amortization |
| Illustrative rate | ~10.25% (Prime + 2.75%) |
| Annual debt service | ≈ $454k |
Structure per SBA 7(a) conventions under SOP 50 10 8; owner-occupancy 60% for new construction; single-loan 7(a) cap $5M. See sources 10, 11, and 12.
The equity injection sits at 15 percent, not the baseline 10 percent, and that is deliberate: SBA policy escalates the required injection for projects that are both special-purpose and, as a ground-up build, effectively a start-up, commonly to 15 to 20 percent or more.11 At $4.08 million the loan also sits below the $5 million single-loan 7(a) ceiling, so the structure works within one 7(a) facility without a companion loan — and the July 4, 2026 decoupling of the 7(a) and 504 caps to $10 million combined leaves ample headroom for an Alabama borrower who later expands.1012 On a 25-year amortization at an illustrative 10.25 percent (Prime plus 2.75), annual debt service is about $454,000 — the number the projected coverage has to clear. The study exists to support exactly that: the debt-service coverage the lender must document to approve the credit, tested against an independent read of demand rather than the sponsor's own projection.
Feasible and bankable, on coverage the credit can document.
The stabilized model builds gross profit from three engines — fuel, merchandise, and foodservice — nets operating expense, and carries the coverage to the SBA floor and beyond.
| Line | Basis | Amount |
|---|---|---|
| Fuel gross profit | 2.0M gal × ~$0.36/gal gross margin5 | ≈ $720k |
| Inside-store gross profit | $2.0M sales × ~33% merchandise margin7 | ≈ $660k |
| Foodservice / QSR gross profit | ~$0.56M sales × ~50% margin7 | ≈ $280k |
| Total gross profit | Fuel + inside + foodservice | ≈ $1.66M |
| Operating expenses | Labor, card fees, utilities, R&M, insurance, property tax, G&A | ≈ ($1.00M) |
| Net operating income (NOI) | Gross profit less operating expense | ≈ $660k |
Fuel line uses a through-cycle gross retail margin near $0.36/gal (before store operating cost), consistent with OPIS/NACS; net fuel margin runs far thinner after the operating expenses shown, which are eased modestly by Alabama's low property tax. See sources 4, 5, and 7.
| Year | Stage | NOI | Debt-service basis | DSCR |
|---|---|---|---|---|
| Year 1 | Ramp (interest-only bridge) | ~$439k | Interest-only ~$418k | 1.05 |
| Year 2 | Building | ~$572k | Full amortizing ~$454k | 1.26 |
| Year 3 | Stabilized | ~$660k | Full amortizing ~$454k | 1.45 |
DSCR computed as NOI divided by the period debt-service obligation. See source 11 for the ~1.15x coverage convention.
The stabilized 1.45x coverage is the figure the lender documents, and it clears the SBA's roughly 1.15x floor with real headroom.11 By Year 2 the project already covers fully amortizing debt service at 1.26x. The Year 1 figure of 1.05x is intentionally below the floor — it is the ramp year — which is exactly why the structure carries an interest-only bridge through stabilization: the bridge covers the ramp, and permanent, fully amortizing coverage is measured once the site reaches its supportable throughput. Modeling mature-store foodservice margins in Year 1, or best-in-class capture on day one, is one of the most common ways these pro formas fail review; the ramp here is deliberately graded.4
On the equity side, the $0.72 million injection earns growing levered free cash flow — roughly $18,000 in the interest-only ramp year, building to about $150,000 a year once stabilized and net of a fuel-equipment capital reserve for tanks, dispensers, and canopy. The exit is valued on a going-concern basis, not a leased-fee cap rate: a station is an owner-operated business, and capitalizing a Year-10 stabilized NOI near $0.66 million at a going-concern overall rate around 11 percent — within the 8-to-12 percent range the market applies to owner-operated stations — implies a gross sale near $6.0 million, and roughly $2.2 million of net equity after selling costs and the outstanding SBA balance.9 Holding fuel volume roughly flat, consistent with durable-but-flat-to-declining gasoline demand rather than a rising-gallons assumption,8 the blended result is an illustrative levered equity IRR of about 20 percent over a 10-year hold.
Verdict: financially feasible and bankable. On independently derived demand, a stabilized 1.45x DSCR, and a ~20% levered equity IRR, the projections support the SBA 7(a) credit.
Independent demand, capture, competition, and DSCR stress.
The engagement was scoped the way a credit committee reads it. As an independent feasibility consultant, our role is to test the sponsor's projection against the market, not to restate it — the value of the deliverable is precisely that it carries no stake in the outcome. We derived fuel throughput from trip origin, corridor traffic, and the competitive set, then placed it within a defensible volume quartile rather than applying a flat capture rate to a traffic count. Inside-sales and foodservice were modeled on a graded ramp at through-cycle margins, not a capitalized peak.
The coverage analysis was then stress-tested. We ran the debt-service coverage against volume and margin downside — the two variables a station is most exposed to — to confirm the credit still holds when gallons or fuel margin compress. One scope boundary is worth stating plainly: as the feasibility consultant, we reference, but do not perform, the Phase I environmental site assessment; underground-storage-tank condition is a separate environmental professional's engagement that runs in parallel to the study.13 That combination — independent demand, capture, competition, and a stressed DSCR — is what lets the lender rely on the file.
Underwriting an Alabama gas station for an SBA loan? Start with the feasibility study.
Feasibility Study Company prepares independent gas station and C-store feasibility studies for SBA 7(a) and 504 credits, built to the coverage standard your lender must document. A methodology briefing walks through the demand, capture, competition, and DSCR analysis behind a case like this one, calibrated to your corridor and format.
Request a methodology briefingData sources and dates.
The deal figures are illustrative of the engagement type; the market data that grounds each dimension is real and sourced, drawn from our standing Alabama, Gas Station & C-Store, and SBA 7(a) & 504 analyses and the primary authorities they cite.
- U.S. Census Bureau, American Community Survey 2024 1-year estimates (Alabama population 5,157,699) and Vintage 2024 Population Estimates; Public Affairs Research Council of Alabama (PARCA), “A Varied Pattern of Population Growth” (March 25, 2025): growth driven almost entirely by net in-migration, 41 of 67 counties growing while 54 recorded more deaths than births, as compiled in the firm's Alabama market analysis.
- Tax Foundation, Alabama tax data (2026); Motley Fool / U.S. Census county effective-rate analysis (2026); Alabama Arise, current-use valuation (2026): the nation's lowest per-capita property-tax collections at an effective rate of roughly 0.37–0.41 percent, against among the nation's highest combined sales taxes near 9.46 percent.
- Mercedes-Benz Group Alabama investment disclosures (2025); Business Alabama, Hyundai Motor Manufacturing Alabama profile (2025); Alabama automotive and EV cluster (Mercedes-Benz at Vance, Hyundai at Montgomery, Mazda-Toyota at Huntsville, Honda at Lincoln).
- NACS State of the Industry data (released April 15, 2026): in-store sales $341.2 billion (23rd consecutive annual increase); fuel 65.0% of sales but 38.8% of gross profit; foodservice 28.5% of in-store sales and 38.9% of in-store gross profit; average convenience transaction ~$12.13; roughly 57% of fuel customers come inside; institutional site-selection practice scanning announced/permitted supply.
- NACS, “Who Makes Money Selling Gas” (2025), citing OPIS Retail Fuel Watch: gross retail fuel margin ~35.7 cents per gallon, falling to ~13 cents net after retail operating costs; Raymond James / OPIS five-year average 39.2 cents (gasoline) and 53.3 cents (diesel).
- NACS, “Who Sells America's Fuel” (January 2026): the average fueling site sells ~2,500 gallons per day (~82,000 per month); bottom-quartile sites under 40,000 gallons/month, top-quartile over 150,000; convenience stores move an estimated 80% of U.S. fuel.
- CT Acquisitions, 2026 Buyer's Guide (citing NACS 2025 data): well-run merchandise operations at 30–35% gross margin and foodservice above 50%, against low-single-digit net fuel margins; operator-level net profit of 3 to 7 cents per gallon; new-build cost context.
- U.S. Energy Information Administration, Today in Energy (April 2026): U.S. motor gasoline consumption 8.9 million barrels per day in 2025 (down 1% year over year, 4% below 2019); forecast 2026–2027 declines driven principally by fleet fuel economy, not EV adoption; light-duty vehicles ~91% of gasoline use.
- Matthews 2025 Cap Rate Recap, STAX Real Estate (2026), and Retail Petroleum Consultants / gasvaluation.com: convenience/gas NNN cap rates from the low-to-mid 5% range (credit) to 7%+ (smaller operators); owner-operator going-concern multiples of ~2.5x–4.0x EBITDA (business alone) or ~8x (business plus premium real estate); going-concern overall rates of 8–12%; the warning that a leased-fee cap rate is not going-concern value.
- U.S. Small Business Administration SOP 50 10 8 (effective June 1, 2025) and 13 CFR 120.160(b): a feasibility study is discretionary but expected for special-purpose properties and ground-up projects; owner-occupancy of 51% (existing) or 60% (new construction); 7(a) can finance the business plus real estate in one loan; single-loan 7(a) cap of $5 million.
- SBA SOP 50 10 8; Bay Street Lending / Growth Corp: gas stations named special-purpose properties; equity injection commonly 15–20%+ for special-purpose and start-up projects; SBA/504 DSCR convention of roughly 1.15x or higher; change-of-ownership going-concern appraisals over $250,000 performed by a Certified General appraiser allocating value across land, building, equipment, and intangibles.
- U.S. Small Business Administration, Alabama District Office (Birmingham) directory (2026); Southern Development Council (SDC) CDC disclosures (2025); GoSBA Loans Alabama 7(a) lender compilation of SBA FOIA data (broker-compiled, not official; Live Oak, Huntington, and Newtek most active by 2025 dollar volume); SBA Policy Notice decoupling the 7(a) and 504 loan caps to $10 million combined, effective July 4, 2026.
- SBA environmental policy (SOP 50 10 8, Chapter 5, Section E) and ASTM E1527-21: gas stations treated as a Special Use Facility; a Phase I ESA runs ~$2,500–$6,000 and a Phase II can exceed $50,000; the feasibility author references but does not perform the environmental site assessment, which is a separate Environmental Professional's engagement.