Auto Repair Shop Feasibility Study in Alabama

Small tickets, modest presence

Alabama's mechanical repair lending sits close to the national pattern, and that is the first thing to say about it. Alabama shops that fix cars and trucks drew 71 SBA approvals over FY2017 to FY2026, totalling $26.3 million. A median of $255,000 stands 1.09x above the class median nationwide, and the location quotient of 0.89x shows repair shops carrying slightly less weight in Alabama than in the country at large. The state ranks 34 of 51 for the class, yet repair is the sixth biggest of 39 asset classes inside Alabama. The test we apply found no metric on which the cell departs from both the state and the class nationally, so this page serves as a plain record of what lenders did.

Who lent and where

Half the approvals fall between $92,500 and $463,300, the range of a bay or two plus equipment, or a small building purchase. Franchise loans account for 16.9% of the cell. The 7(a) program carried 60 loans and 504 only 11. Southern Development Council is the lone development company with 5 or more loans, at 6 loans and $2.2 million. BayFirst National Bank shows 5 loans and $1.3 million, while Wells Fargo Bank National Association also shows 5 but only $45,000 in total,, which points to small tickets rather than real estate loans. Jefferson County has 15 loans, Madison 7, Montgomery 6 and Baldwin 5.

A choppy calendar

FY2017 delivered 12 loans and $1.5 million, then FY2018 fell to 2 loans and $119,000. Activity climbed to 10 loans and $3.5 million in FY2023 and reached 9 loans and $6.0 million in FY2026, the largest dollar total of any year. Cancellations after approval reached at least 9.3% among files approved from FY2017 through FY2024, with a ceiling identical at 9.3%. A charge-off rate is not published because too few loans funded in that cohort to support one; the omission is a limit of the data and should never be read as zero losses.

What a study has to test

Repair is a labor business, so an Alabama study starts with technicians: can the owner recruit and keep certified mechanics at the wage the pro forma assumes, and how many billable hours a bay can realistically sell. Demand should be sized by vehicles in service within the drive time, the share served by dealers and chains, and the competing independents. Cost must fit a ticket near $255,000, with lifts, diagnostic tools and an environmental allowance for fluids and waste included. Debt service coverage should be shown with a slow first year and a technician vacancy built in. An appraiser values a leased shop mostly on equipment and goodwill, so the lender will want the cash flow to carry the loan without help from collateral.

A coding limit

The data pools truck service with car repair, and the class leaves out body and paint work, glass, oil changes and other automotive repair, which have their own pages.