Auto Repair Shop Feasibility Study in Iowa

A small-ticket class that Iowa lenders know well

Mechanical repair garages are a workhorse in Iowa. The class stands 5 of 39 inside Iowa's mix, yet 81 loans place Iowa only 33 of 51 in the national table. Those loans, approved from FY2017 to FY2026 and totalling $17.8 million, are modest: the median is $150,000, only 0.64x what the class typically borrows nationally, and borrowers sit mostly between $50,000 and $290,000. A location quotient of 1.09x shows a share just above the national norm. Iowa uses SBA credit for repair shops in an ordinary way, with checks smaller than shops elsewhere receive.

Mostly 7(a), some 504, very few franchises

SBA 7(a) carried 66 of the loans and SBA 504 carried 15. Franchise affiliation is rare at 7.4% of loans, so the file mostly describes independent garages and service bays. Among certified development companies, Iowa Business Growth Company stands out with 7 loans worth $2.6 million. Under 7(a), U.S. Bank, National Association holds 14 loans, though they total only $801,600, a sign of tiny tickets. Nicolet National Bank has 7 loans worth $2.4 million, so its average loan runs far larger. Polk County tops the map with 14 loans; Linn and Story follow with 7 each, then Dubuque and Scott with 5.

Leakage after approval and a clean early repayment record

Between FY2017 and FY2024, at least 12.7% of approvals were later cancelled, and the ceiling, which counts anything still undisbursed, is 14.3%. A borrower should read this as a real chance the money never arrives, often because a lease, an equipment quote or a real estate purchase falls away. Repayment looks cleaner. In the 30-loan cohort disbursed during FY2017 to FY2021, nothing has been charged off to date at 0.00%, and nothing failed inside five years either. Both figures are floors on a small cohort. Approvals have held up well, from 9 loans in FY2017 to 15 in FY2025, with dollars reaching $3.4 million in the latter year.

Questions for the study

A study for a repair shop in Iowa should test demand from vehicle counts and competing bays within a short drive, rather than statewide averages. It should price the building or leasehold, lifts, diagnostic equipment and working capital against the modest sizes seen in this file. Coverage has to hold through a slow service season, and the appraisal must support the real estate if the lender takes it as collateral.

Truck service cannot be told apart from car repair here, so the class combines both. Body and paint work, glass, oil change outlets and all other automotive repair fall outside these counts.