Auto Repair Shop Feasibility Study in Utah

Utah writes larger repair-shop loans

Utah lends to auto repair at close to the national weight but writes larger loans to do it. Its 226 SBA approvals for mechanical repair shops across FY2017 to FY2026 add up to $115.9 million, ranking Utah 19 of 51 for the class, and the location quotient of 1.06x is near parity. What sets this cell apart is a median loan of $337,500, which is 1.44x the national median for auto repair and clears our distinctness margin against that national figure and against Utah's median across every asset class. Within the state, repair shops rank 4 of 39 among classes, so lenders here see the trade often.

Certified development companies do much of the work

Program mix explains part of the size. SBA 504 carried 70 of the loans and 7(a) 156. Mountain West Small Business Finance is the dominant certified development company, holding 45 loans worth $30.4 million, with Intermountain Business Lending, Inc. at 23. Mountain America FCU leads the 7(a) lenders with 30 loans, followed by Zions Bancorporation, National Association at 22 and U.S. Bank, National Association at 13. The middle half of approvals spans $135,425 to $647,750, and franchise brands hold 14.6% of loans. Salt Lake County accounts for 92 approvals and Utah County for 39. FY2024 was the busiest year by count, with 33 loans, while FY2026 brought 29 loans and the highest annual dollar total in the series, $26.7 million.

Outcomes on the lighter side

Both of Utah's outcome floors run below the class nationally. Cancellations after approval reach at least 9.2% of FY2017 to FY2024 approvals, or 10.3% treating loans not yet disbursed as cancelled. Of the 102 Utah repair loans disbursed over FY2017 to FY2021, 3.9% are charged off to date and 0.98% within five years. Neither rate is distinctive by our test, and both are floors that can still rise as open loans age.

For a Utah shop, the larger ticket raises the bar for the study rather than lowering it. Demand has to be shown at the address: vehicles in the trade area, traffic past the site, and the dealers and chains competing for the same work. Cost must cover the building or build-out, lifts and diagnostic tools at current prices, since a 504 structure usually means the borrower is buying real estate. Coverage of debt service needs a downside run at a lower car count and with technician wages at market rates. Appraising a repair garage is a special-purpose exercise, and the study should hand the appraiser income evidence strong enough to carry the value a 504 lender will need.

The class covers mechanical repair of cars and trucks together under one code, so truck service is inside these numbers; collision and paint shops, glass installers, lube shops and the miscellaneous repair code sit outside it.