Car Wash Feasibility Study in the Los Angeles-Long Beach-Anaheim, CA Metro Area

Where Los Angeles stands for this class

SBA's loan files record 208 approvals for wash operations in Los Angeles over FY2017 to FY2026, worth $427.8 million in gross dollars committed. Local sizing is anchored by $1.8 million; compared with the class's national median, at present, that is a ratio of 1.92x, so approvals run larger here. The central half of approvals stretches from $768,500 to $3.2 million. Nationally Los Angeles stands 1 of 458 of metro and micro areas for these loans, as a matter of record, and within the area car washes rank 13 among its 39 lending classes. The location quotient, 1.11x, says car washes make up a larger portion of area SBA lending than the nationwide mix.

Program mix and lenders for wash operations

2.4% of the Los Angeles loans went to franchised businesses. For 504 financing, 7 approvals sit with Bay Area Employment Development Company, 6 with AMPAC Tri-State CDC, Inc. and 5 with The Mortgage Capital Development Corporation. Of the 208 approvals, 165 are 7(a) approvals and 43 are 504 loans, which shows us which SBA route wash operations applicants have used around Los Angeles. Under 7(a) lending, PCB Bank leads at 20; then Open Bank (14) plus Bank of Hope (13 loans). Lender figures for wash operations in Los Angeles are drawn from SBA's holder field: as reported, each loan is credited to the holder it has today, so the rows say nothing about lending standards.

Los Angeles by county and fiscal year

Only a single project county matters for car washes in Los Angeles: as filed, Los Angeles County, CA, at 161 approvals. The busiest year for Los Angeles car washes was FY2021 with 34 loans and $78.1 million; the quietest was FY2022 with 13 loans and $24.2 million.

What the cancellation and loss floors allow a reader to say

16.5% at least of the FY2017 to FY2024 approvals for wash operations in Los Angeles ended in cancellation, a floor (the ceiling is held back). Nothing is shown for charge-offs for car wash approvals in Los Angeles: too few loans were disbursed, and silence should not be taken as proof of no losses. One code covers tunnel washes, truck washes and mobile operators, so the Los Angeles record cannot tell which kind a loan financed. Los Angeles is a county-based figure: only loans whose project county, as SBA lists it, matches the 2023 area by name are counted for car washes.

Feasibility questions for car washes around Los Angeles

Before anything else, Los Angeles demand has to be tested: weather, seasonal swings, road access and room for a queue. Lending history of 208 loans reflects what institutions did for car washes, and is silent on a specific corner. Coverage of debt service decides the case for car wash businesses in Los Angeles: it has to hold while sales climb slowly, given the floors above show cancelled and charged-off approvals nearby. The cost side covers vacuum and detail areas as well as equipment replacement cycles, and the car wash total should be judged against the central half of Los Angeles loans, $768,500 to $3.2 million. In the appraisal, a Los Angeles lender will weigh going-concern value of the wash and equipment with little collateral value.