Auto Repair Shop Feasibility Study

Three leaders, then count and money part ways

California, Texas and Florida lead the decade with 1,435, 838 and 637 loans and $855.9 million, $531.0 million and $327.5 million. Past those three, the order depends on what is counted. Colorado, ninth by loans with 380, holds the largest dollar total after those three, $230.1 million. New York and Ohio, fourth and fifth by loans with 521 and 480, carry $158.0 million and $109.7 million, less than Arizona's $178.8 million on 283 loans. Ohio's dollars also trail Georgia, Washington, North Carolina, Utah and Virginia, each with fewer loans. The table draws two maps, one by loans and one by dollars, and lenders in each state are used to different repair deals.

Small tickets in the Northeast and Ohio

The state medians split the country. The smallest are West Virginia's $58,000, Vermont's $60,000, Ohio's $70,000, New Hampshire's $72,500, New York's $80,000, Delaware's $87,500 and Maine's $92,500. The largest are Alaska's $486,500 on just 28 loans, $400,000 in California and Arizona, Nevada's $385,700, Colorado's $373,200 and Georgia's $370,000. Set against the national 7(a) median of $180,000, a typical Ohio or New York repair loan points to the purchase of an operating shop, its equipment or its working capital, so the study there rests on the shop's records and technicians. In Arizona or Georgia the typical loan sits near the $408,000 national 504 median, and the building carries more of the case.

Where 504 carries weight

California's 282 504 loans lead, and Minnesota is second with 110, ahead of Florida (90), Massachusetts (89) and Illinois (85), though Minnesota is only tenth by total loans; no state ranked above it leans as far toward 504. South Dakota (15 7(a), 26 504) and North Dakota (18 and 19) are the only states where 504 outnumbers 7(a). Louisiana, Mississippi and West Virginia record no 504 repair loans, Delaware one and Tennessee three, and Texas, second by loans, has 56 504 loans against 782 under 7(a). The mix matters because the programs part on losses, 5.6% for 7(a) against 0.14% for 504 nationally: Minnesota prints the lowest floor above 0.00% in the table, 1.1%, while 7(a)-heavy Texas prints 9.1%.

Charge-off floors by state

Among the states whose cohort is large enough to print a rate, the charge-off floors peak in Nevada (10.9%), Florida (10.2%), Pennsylvania (9.2%) and Texas (9.1%), then Maryland (8.2%), New York (8.1%), New Jersey and South Carolina (8.0%) and Oklahoma (7.9%), all above the 5.6% national 7(a) floor. California, with the largest book and a $400,000 median, stands at 3.0%, beside Ohio's 3.1% on a $70,000 median. Loan size does not explain the spread: Texas, North Carolina and South Carolina share a $350,000 median and print 9.1%, 3.6% and 8.0%. Oregon, Iowa and Nebraska print 0.00%, a floor later losses can still raise. In the high-floor states the study must show why this shop differs from the funded shops that failed there.

Approvals that never close

Cancellation floors spread as widely: Maine leads at 22.7%, then Hawaii at 20.0%, Oklahoma at 18.6% and Illinois at 18.3%, against 12.4% for 7(a) and 12.1% for 504 nationally. Illinois, sixth by loans, cancels heavily but charges off only 3.9%, so its repair deals tend to fail before funding rather than after; Georgia shows the reverse balance, 7.8% cancelled and 3.9% charged off. Oklahoma is high on both, and Nebraska prints 0.00% on both. Nothing in the loan record explains a withdrawn approval, so in a high-cancellation state the study tests the causes a lender can see ahead: a price above what the shop's earnings support, an appraisal short of the loan, and environmental findings on a site that has stored waste oil.

States without a loss rate

From Alabama down the charge-off column carries no rate, and from Delaware down neither rate is printed; Wyoming's 22 loans and $9.8 million are too few even for a median. Alaska is the outlier in this group: 28 loans carry $23.4 million at a $486,500 median, the highest in the table and more dollars than Iowa's 81 loans ($17.8 million). With no local loss rate, the study states the gap, borrows the national and nearest state floors, and leans on its own count of vehicles and competitors.

The largest books by count and by money

The Huntington National Bank has the most repair shop loans, 732 worth $182.4 million; U.S. Bank, National Association is second with 599 worth $194.9 million, and TD Bank, National Association third with 499 worth $48.0 million. By dollars the leader is Live Oak Banking Company, whose 362 loans total $390.8 million, more than Huntington's or U.S. Bank's larger counts. TD Bank's 499 loans carry the same $48.0 million as Bank of America, National Association's 107, and Manufacturers and Traders Trust Company's 344 loans total $26.9 million. These are different kinds of lending, and the study is pitched to the loan size the borrower's lender actually makes.

Lender loss floors

Where a cohort supports one, the lender floors range widely: TD Bank at 17.6%, BayFirst National Bank at 13.8%, Northeast Bank (ME) at 12.3%, Celtic Bank Corporation at 9.1%, Wells Fargo Bank National Association at 7.3% and Huntington at 6.0%, against U.S. Bank's 2.9% and 0.00% at Bank of America, SouthState Bank, National Association and Enterprise Bank & Trust. The three highest floors belong to books with modest dollars for their loan counts: TD's $48.0 million on 499 loans, Northeast Bank's $41.4 million on 255 and BayFirst's $41.5 million on 196. A lender with a high floor here will read the study's downside case line by line.

Recent books and withheld rates

Newtek Bank, National Association, fourth by loans with 401 worth $147.9 million, prints no rate: its repair loans disbursed in FY2017 to FY2021 number below the 30 a rate needs, so most of its book was approved later or never funded. The same holds for First Internet Bank of Indiana (38 loans, $50.4 million), Banc of California (31, $38.4 million) and VelocitySBA, LLC (27, $30.0 million). Many other books, Live Oak's among them, print withheld, and OakStar Bank's dollars are withheld as well. A study submitted to one of these lenders cites the national and state floors instead and never treats the missing rate as zero.

Reading the table as a shortlist

The table ranks lenders nationally and does not split a book by state or program, so a lender's place in it shows how much repair shop credit it has underwritten, not where. Harvest Small Business Finance, LLC (124 loans, $114.7 million) and Enterprise Bank & Trust (86, $80.0 million) run books of larger repair loans. For a borrower still choosing, the table lists institutions that have already lent to repair shops, and the study is written to the one chosen, citing its row where the page prints it.

More workers in about as many shops

County Business Patterns counted 91,481 establishments in the class in 2018 and 93,082 in 2023, while March employment rose from 392,511 to 436,638 and 2023 payroll reached $23.03 billion. The number of shops barely moved; the workforce grew far more. Ohio went from 3,193 establishments to 3,150 while employment rose from 14,027 to 17,389, and Michigan from 2,895 to 2,881 while employment rose from 12,444 to 14,486. Flat or falling shop counts with more workers mean larger shops, and the study sets the subject's bays and technician bench against that trend: a small new shop competes with growing ones for customers and technicians alike.

Where the count of shops grew

Texas added more establishments than any other state, from 6,382 to 7,081, with employment rising from 30,786 to 37,785. Florida (5,472 to 5,811), Arizona (1,685 to 1,872), Georgia (2,381 to 2,518) and California (10,653 to 10,758) come next. Florida passed New York on the way: New York had more repair establishments in 2018, 5,832 against 5,472, and fewer in 2023, 5,667 against 5,811. In these states the competitive survey has to find shops opened since the last directory was printed, and the demand case has to keep pace with that new supply.

Where it shrank

New York lost the most establishments, from 5,832 to 5,667, followed by Massachusetts (2,089 to 1,989), Maryland (1,831 to 1,740), Pennsylvania (4,892 to 4,819) and Connecticut (1,054 to 984), each with an SBA repair median below the national 7(a) median of $180,000. Rhode Island and Hawaii lost both shops and workers, Rhode Island falling from 393 to 361 establishments and Hawaii from 269 to 250. Where the count is shrinking, the study must tell a lender whether the subject shop gains customers from closures nearby or competes for a smaller pool.

Payroll and the labor case

Payroll is the cost side of the technician case. Indiana's 10,831 employees drew $549.5 million in 2023, less than Washington paid 9,682 employees ($600.8 million) or Colorado paid 9,941 ($605.6 million); Arizona employed slightly fewer than Indiana, 10,618, and paid more, $610.5 million. A repair shop sells technician hours, so the study's labor cost has to sit on the state's own wage level and its labor rate on what local customers will pay; a pro forma that borrows one state's wages for a shop in another misstates both lines at once.

Shops against SBA loans

Setting establishments beside loans shows how far SBA reaches into each state's repair trade. Utah (937 establishments in 2023, 226 loans) and Kansas (900, 92) have similar numbers of shops and very different SBA use; so do New Hampshire (700, 154) and Maine (645, 66). Pennsylvania has 4,819 establishments and 399 loans, fewer loans than Ohio's 480 from 3,150, and Colorado (1,797 establishments) and Minnesota (1,835) each record nearly as many loans as Pennsylvania. Alaska, Delaware and Vermont print no total because Census does not publish one of the class's codes there, and Wyoming has 2018 values only; those gaps are not zeros. Where SBA lending is thin against the trade, a lender leans harder on the study's own counts.