How to Start a Petrol Pump Business and Secure Financing for It

The petrol pump business is one of the most lucrative business models across the world. The growth of transportation and personal vehicles has caused an increase in the demand for this business. Establishing and running a petrol pump business might seem  challenging to many. 

However, given the number of formalities and administrative procedures involved, the returns far outweigh the efforts. To maximise profit from the business, you need to have a detailed petrol pump business plan.

Understanding the process and developing your own plan based on it is essential for ensuring a successful venture in the long run.

There are two types of petrol pumps based on the service they provide to customers:  

• Full-Service Petrol Pump

These petrol pumps have attendants who assist in refuelling the vehicle. They fill petrol, check the oil, and help with the payment process. This type is common in India and is beneficial for those who require assistance. 

Customers only need to specify the amount of petrol needed, and the attendants handle the rest.  

• Self-Service Petrol Pump

At these petrol pumps, customers are responsible for refuelling their vehicles, checking the oil, and cleaning the windshield. These are not very common in India. Some locations offer both types, allowing customers to choose their preferred option.

Petrol pumps are a highly regulated industry, and there are a number of steps involved in starting a business. Here’s a breakdown of the steps involved in starting a petrol pump business.

1. Make a Business Plan

To start any business, you need to make a thorough business plan that is sustainable in the long run. You also need to take into account all your unique advantages and disadvantages. The key points of your business plan need to include:

• Follow the regulations established by oil companies and the government

• Conduct research on the type of pump to operate

• Assess investment requirements and explore financing options

• Obtain the necessary licences and permissions

• Apply for a dealership with major oil companies

• Construct the petrol pump and recruit staff

• Select a strategic location for the business

• Purchase the required equipment and supplies

• Arrange fuel deliveries from the oil company

• Implement promotional strategies to attract customers

2. Know the Eligibility Criteria

The Government of India has set certain rules for opening a petrol pump. You must meet these requirements before starting the process:  

• The applicant needs to be an Indian citizen; Non-Resident Indians (NRIs) need to provide proof of residing in India for at least 182 days

• The applicant has to be between 21 and 55 years of age

• A birth certificate is required during the application process

• For the rural area, you must have passed the 12th grade

• For urban areas, you must have a university degree from a UGC (University Grants Commission)- recognised university

• If you belong to the freedom fighter category, you are exempt from these academic requirements 

• You must invest minimum ₹15 Lakhs for a dealership in a rural area and ₹2 Crores in an urban area

• The location of the pump should not be in a restricted or blacklisted area

3. Source Funds

Opening a petrol pump dealership requires a significant investment. The funds you invest play a crucial role in determining the success of your business. To establish a petrol pump in a rural area, a minimum investment of ₹15 Lakhs is necessary. In urban locations, the required amount is higher, from ₹25 Lakhs or more if the land is owned. 

Besides cash, you can arrange funds from:  

• Savings accounts  

• Bank deposits  

• Bonds and shares 

• Business Loans

• Fixed deposits  

• Mutual funds  

• National Saving Certificates  

• Postal saving schemes

4. Study Competition

In order to be more strategic and make informed decisions that are instrumental to your success, it’s important that you study your competition. This can be a great way for you to understand the business model a little bit better. 

This will also help you recognise a number of opportunities that you can seize while also giving you an idea of the potential mistakes to avoid for success. This will help you to position your business for growth and success.

5. Find Ideal Land for your Business

Since this business is land-intensive, it’s important that you choose a piece of land that is compatible with the petrol pump business model. Highways, main roads or roads where there is demand for petrol pumps can be ideal. 

You also need to meet these land requirements to set up a petrol pump:  

• You need to own the land or lease it for the period specified by the oil company

• You have to prepare all legal documents for verification

• The land needs to be constructed to ensure easy access from the road

• For rural areas, a minimum of 800 square metres is required for a single dispensing unit and 1,200 square metres for two dispensing units

• For urban areas, a minimum of 500 square metres is required for a single dispensing unit and 800 square metres for two dispensing units

• On national highways, a minimum of 1,200 square metres is required for a single dispensing unit and 2,000 square metres for two dispensing units

To operate a petrol pump efficiently, obtain the following approvals:

• Location’s Certified Copy

Authorities legally recognise the petrol pump location, serving as proof of its existence and authenticity. Obtain this document from the local land records office or the municipality.

• No Objection Certificate (NOC)

Acquire clearance from the licensing authority. This ensures there are no legal objections to the operation of the petrol pump at the designated location.

• Necessary Permissions

Secure approval from the Municipal Corporation and Fire Safety Office to ensure safe operations. These permissions confirm adherence to local safety regulations and environmental guidelines.

• Certification and NOC from Authorities

Comply with all regulatory requirements by obtaining the necessary certifications and approvals.

Financial stability is essential for achieving long-term success in your business. It is important to plan investments carefully to avoid errors and prevent financial losses

A business loan can help you establish a petrol pump if your budget exceeds initial estimates. Financing can assist in covering the following expenses:

• Initial Costs: Purchasing and obtaining permits for land, as well as constructing the petrol pump

• Ongoing Expenses: Fuel procurement, employee salaries, maintenance, electricity, water, and other utility bills

• Equipment: Fuel dispensing pumps, storage tanks, and other essential machinery

A petrol pump business loan from a reputed lender will help you cover essential initial costs. These loans are designed to meet the financial requirements of both new and experienced business owners. Here are the advantages you will receive:

• You will receive quick funds for your requirements as the approval and disbursal process for a business loan is faster than other borrowing methods

• You need to submit minimal documents to secure a high-value loan, as some banks approve loans based on your credit history without requiring collateral

• Explore various loan options to select a repayment plan that aligns with your financial capacity

• Lenders compete to attract borrowers, leading many to offer lower interest rates to stand out

You can secure a high-valued loan on Bajaj Markets. Simply compare different lenders and apply with minimal documentation. Here is the list of lenders you can compare to choose the one that fits you best: 

Disclaimer: The mentioned rates are subject to change at the lender’s discretion.

To apply for a business loan from Bajaj Markets, you need to meet specific eligibility criteria related to nationality, age, creditworthiness, business status, and financial records. The key requirements are as follows:

Eligibility Criteria

• Employment: You need to be self-employed, either as a professional or non-professional

• Citizenship: You must be an Indian citizen

• Credit Score: A good CIBIL score is required

• Company Type: Your business needs to be registered as a private limited company, partnership, or LLP

• Business Vintage: Your business must have been operational for at least one year

• Turnover: Your minimum annual turnover needs to be ₹1.5 Lakhs, as reflected in ITR records

• Age: Your age should be between 21 and 60 years

Documents Required

• Identity Proof: PAN card, Aadhaar card, passport, Voter ID, or driving licence

• Address Proof: Aadhaar card, lease agreement, utility bills, or passport

• Income Proof: Last six months' bank statements, income computation, Profit and Loss (P&L) statement, ITR with certified details, and balance sheets for the past two years

With careful planning and effective financial management, you can operate a successful petrol pump business. Land, construction, and staffing require a significant investment. A loan for opening a petrol pump will help cover most of these expenses. 

You need to choose a flexible repayment period based on your income flow and focus on expanding your petrol pump.

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