Auto Repair Shop Feasibility Study in Michigan

Michigan's repair shop lending is modest in dollars and concentrated in one bank. SBA approved 390 loans to automotive mechanical repair shops in the state over FY2017 to FY2026, totalling $131.5 million, which places Michigan 8 of 51 among states. Inside Michigan the class is 4 of 39, and at 0.94x, the location quotient leaves Michigan repair shops slightly under their national weight in SBA lending. Our test reads three measures for distinctness (median, cancellation floor, charge-off floor) and none of them separates this Michigan cell from both Michigan's all-class figures and repair shops nationally by our margin. The story here is loan size and lender concentration.

A small-ticket market led by Huntington

The median loan is $150,000, only 0.64x the class median nationwide, and half of Michigan's repair loans sit between $50,000 and $400,000. A loan of that size usually funds equipment, working capital or a business purchase with little real estate behind it, and the program split points the same way: 353 approvals under SBA 7(a) and 37 under SBA 504. Of the 7(a) loans, The Huntington National Bank holds 177, $32.8 million in all, while Newtek Bank, National Association holds 16, ChoiceOne Bank 15 and Fifth Third Bank 11. Michigan Certified Development Corporation is the top 504 holder at 21, and Great Lakes Commercial Finance follows with 15. Huntington's count is what SBA shows it holding now, which can include loans it acquired.

Outcomes a Michigan lender will price in

Cancellation runs at a floor of 13.0% for FY2017 to FY2024 approvals, rising to 14.9% when loans not yet disbursed are counted, so a borrower should expect the deal to be re-checked before funding. The charge-off floor is 4.0% for the 151 loans disbursed in FY2017 to FY2021, and 3.3% failed inside five years of approval, which tells a lender that weak Michigan shops tend to fail early. Volume has held steady rather than surged: FY2017 had 28 approvals and FY2024 had 44, with FY2024 dollars at $24.6 million. Franchise units are 6.2% of the book.

What a Michigan shop study must test

Demand belongs at the county level. Oakland County has 56 approvals and Wayne 53, with Macomb at 37 and Kent at 35, so those markets set the competitive baseline for any new bay count. Because tickets are small, cost testing is mostly about lifts, diagnostic tools and the working capital to carry a new shop through its ramp. Debt service coverage should be proven on conservative car counts, since the early losses say that thin margins show up fast. The appraisal matters less where no real estate is pledged, but an acquisition still needs a supportable value for the goodwill. Truck service shares the code with car repair, and body, glass, oil change and other repair shops are excluded from the class, so a study for those formats needs its own comparables.