Car Wash Feasibility Study in California

California car washes are large-ticket real estate

No state approves more SBA car wash loans than California, which ranks 1 of 53. The 505 loans from FY2017 to FY2026 total $906.1 million, and the median loan of $1.4 million is 1.56x the national median for the class. That median is the metric on which California stands apart from both its own all-asset lending and car washes nationally. Half of California's loans fall between $500,000 and $2.7 million, which is the range of land, tunnel equipment and a building rather than a small working capital request. Car washes rank only 15 of 39 among California's asset classes by count, and the location quotient of 1.08x shows a share of state lending only slightly above the national share. The class is not unusually common here; it is unusually expensive.

The lender table points the same way. PCB Bank holds 23 loans for $56.3 million, Celtic Bank Corporation 21 for $63.7 million, Bank of Hope 20 for $44.7 million and Open Bank 20 for $38.5 million, all 7(a) loans, while U.S. Bank, National Association holds 40 for $8.7 million. On the 504 side The Mortgage Capital Development Corporation holds 18 loans for $31.7 million, Bay Area Employment Development Company 16 for $32.2 million and AMPAC Tri-State CDC, Inc. 13 for $28.0 million. SBA 7(a) carried 406 loans and SBA 504 carried 99. Franchise brands account for only 2.4% of loans, so most of these are independent or regional operators.

Floors, volume and what they mean

Cancellation after approval sits at a floor of 14.2% for FY2017 to FY2024 approvals and 16.5% with undisbursed loans included. Charge-offs are low: 2.4% to date among the 252 loans disbursed from FY2017 to FY2021, and 1.2% within five years. Volume peaked at 77 loans and $150.7 million in FY2021 and has run lower since, with 34 loans in FY2023 and 36 loans worth $54.6 million in FY2026.

What a California wash study must test

At a $1.4 million median, a study carries real weight in the credit decision. Demand has to be measured as cars per day at the site, from traffic counts, access and the competing tunnels and membership plans nearby, and the busiest counties, Los Angeles with 161 loans, Orange with 47, San Diego with 46 and San Bernardino with 45. Cost needs firm numbers for land, equipment, water reclamation and permitting. Test debt service coverage on ramp-up volume, not on the stabilized volume. The appraisal must support the land and improvements as a special-purpose property. One data caution: the single code behind these figures also covers truck and mobile washing, so those operations cannot be split out.