Auto Repair Shop Feasibility Study in New York

Small tickets are the New York signature

The figure that separates New York from both its own SBA record and the repair class nationally is loan size: at $80,000, the median is only 0.34x the national median for automotive mechanical repair, with the central half of the range spanning $30,000 to $280,000. Lenders approved 521 New York loans in the class over FY2017 to FY2026, for $158.0 million. New York holds rank 4 of 51 nationally and the class is 7 of 39 inside the state, but the location quotient of 0.76x says repair shops are a lighter part of New York's SBA lending than of the country's.

Loans this small rarely buy a building. SBA 504, the program built for real estate and heavy equipment, accounts for just 28 loans against 493 under 7(a), and franchise borrowers are only 3.5% of the total. The typical New York borrower is an independent shop financing equipment, working capital or the purchase of an existing business, most likely in leased space. The lender table says the same thing. Manufacturers and Traders Trust Company holds 105 loans for $6.1 million and TD Bank, National Association 97 loans for $8.2 million; Five Star Bank (25 loans) and ESL FCU (21) follow. On the 504 side the top name is Empire State Certified Development Corporation, 23 loans for $14.4 million. This is not a New York City story either: Suffolk (79 loans), Monroe (45), Nassau (44) and Erie (38) all outrank Queens (35).

Cancellation and losses on a small loan book

Small loans have not meant safe loans. Of the 211 loans disbursed in FY2017 to FY2021, 8.1% have been charged off to date and 3.8% within five years of approval, both floors that can only rise. That floor runs above the class nationally. Cancellation is high as well: 15.6% of approvals made in FY2017 to FY2024 were later cancelled, and 16.4% if loans that were never disbursed are counted, again above the national figure for repair shops. Volume dipped to 37 loans in FY2021 and recovered to 77 in FY2025 before 54 in FY2026.

Testing a New York repair shop project

We would ask a study for this state to explain any request far above the $280,000 top of the middle half, because the record says New York lenders mostly finance shops, not real estate. Demand means counting cars per bay in the actual trade area, whether that is Suffolk or Erie. Cost should separate the lease, the tenant work and the equipment. The coverage ratio must survive on the owner's own labor, since many of these are small operators. If property is part of the deal, the appraisal must stand on its own as a special use building, without leaning on business value.

A caution on coverage: the code puts truck repair in with car repair, and it leaves out collision and paint shops, auto glass work, oil change outlets and the general repair code, each of which has a code of its own.