Auto Repair Shop Feasibility Study in Wisconsin

Repair shops carry real weight in Wisconsin

Mechanical repair is one of the pillars of Wisconsin's SBA lending. Car and truck repair shops rank 3 of 39 Wisconsin classes on the number of loans, and the location quotient of 1.23x says they take a noticeably larger share of Wisconsin approvals than the class takes nationally. Across FY2017 to FY2026 the state approved 279 of these loans for $108.1 million, which puts Wisconsin 15 of 51 among states. Loan size is close to the national norm: the median of $225,000 sits at 0.96x the class's national median, while Wisconsin's middle half of loans runs from $88,750 to $449,750. Because the median and both outcome rates stay within our margin of the Wisconsin all-asset record or of repair shops nationwide, the cell is not distinctive on those gauges; its signature is concentration.

Wisconsin shop owners make real use of SBA 504, with 47 of the approvals against 232 under SBA 7(a). Of those 504 loans, WBD, Inc. holds 45, worth $22.1 million, so a Wisconsin owner buying a shop building will very likely work with that development company. The 7(a) side is spread: Summit CU holds 25, Bank First, N.A. 16, U.S. Bank, National Association 15, Associated Bank National Association 14 and The Huntington National Bank 13. Franchise concepts take 3.9%, so these are mostly independent shops. Waukesha County leads with 28 approvals, then Milwaukee with 22 and Dane with 21. The pace has been uneven, with 45 loans in FY2017, 37 in FY2022 and the most dollars, $15.8 million, in FY2024.

Losses that waited past year five

Cancellations claimed at least 12.1% of Wisconsin's FY2017 to FY2024 shop approvals, and with no undisbursed loans left from those years the ceiling is also 12.1%. The charge-off pattern is unusual. Of the 130 loans disbursed in FY2017 to FY2021, 2.3% are charged off to date, while the five-year charge-off share for Wisconsin shops is 0.00%. In Wisconsin, then, each charge-off on record came late. Both figures are floors, and they argue for underwriting the whole term rather than the first years.

What a Wisconsin study should show

We would build a Wisconsin repair shop study around these tests. Demand: vehicles, traffic and competing bays in the trade area, read separately for suburban counties such as Waukesha and smaller markets such as La Crosse or Sheboygan. Cost: lifts, diagnostic systems and the building, priced at current local quotes. Coverage: debt service carried by labor and parts margins with room for a weak year late in the term, since the late losses suggest shops can falter after the start-up years. Appraisal: for a 504 purchase the building has to support the loan on its own value.

The class has limits worth stating. Wisconsin truck shops sit inside these numbers, coded with car repair and inseparable from it; Wisconsin collision shops, glass installers, oil change outlets and other automotive repair do not.