Auto Repair Shop Feasibility Study in Kentucky

A typical repair shop book, by our test

Kentucky's SBA lending to car and truck mechanical repair shops looks, on the whole, like the class elsewhere. The state recorded 85 approvals worth $30.6 million from FY2017 to FY2026, ranking 32 of 51 states, and a location quotient of 0.99x says repair shops hold almost exactly the same share of Kentucky's SBA book as of the nation's. Among Kentucky classes the shop sector is 5 of 39. On median loan, cancellation and charge-off alike, the Kentucky figures stay within our margin of either the state's all-class book or the national class, so no gauge here earns the label distinctive. What the cell does show is deal size and where deals fall apart.

The Kentucky median is $250,000, 1.06x the class's national midpoint, while the middle half of approvals spans $75,000 to $450,000, wide enough to hold a lift and diagnostic package at one end and an established shop with its building at the other. The number a Kentucky owner should study hardest is cancellation. For FY2017 through FY2024 approvals the floor is 15.7%, and adding undisbursed loans leaves the ceiling at 15.7%. A Kentucky shop deal that dies after commitment has usually changed shape: a low appraisal, a seller who walked, contamination found under an old service bay, or equity that never arrived. Among 40 shop loans disbursed in FY2017 through FY2021, Kentucky's charge-off floor is 5.0% and the five-year figure is 2.5%, and a group that small moves with a handful of loans.

Who holds Kentucky shop loans

SBA 7(a) carried 73 approvals and SBA 504 carried 12. U.S. Bank, National Association is the largest current holder, with 21 loans under 7(a) worth $4.9 million, a book weighted toward equipment and working capital. Community Trust Bank, Inc. holds 8, Stock Yards Bank & Trust Company 6 and The Huntington National Bank 5, worth $2.7 million. Community Ventures Corporation holds 5 SBA 504 loans for $3.3 million, the route owners take when the building is part of the purchase. Franchise brands account for 9.4% of loans, and yearly volume swings from 19 approvals in FY2018 to 3 in FY2019 and 5 in FY2026.

What a Kentucky shop study has to prove

Demand clusters around Louisville and the northern counties: Jefferson County leads with 20 approvals, followed by Warren with 8, Campbell with 7 and Oldham with 6. A study must count the bays already serving its trade area and show enough traffic and fleet work to keep new ones busy. On cost it needs real quotes for lifts, scan tools and building work, and, for an older shop, an environmental review priced before commitment, since that finding is a common way a Kentucky approval becomes a cancellation. Coverage of debt service has to rest on labor and parts margins in the opening years. The appraisal must value the garage as another operator would buy it, apart from the business. Coding limit: truck service is filed with car repair, while collision and paint, auto glass, quick lube and other automotive repair carry codes outside this class.