Car Wash Feasibility Study in Michigan

Many Michigan washes, smaller loans

The median Michigan car wash loan is $350,000, only 0.38x the class's national median, a shortfall wide enough to pass our distinctness margin against both car washes nationally and Michigan's all-class record. Volume runs the other way. Michigan's 159 approvals from FY2017 to FY2026, carrying $122.7 million, put it 6 of 53 among states, while its 1.16x location quotient shows car washes carrying more weight in Michigan SBA lending than nationally, though washes place only 13 of 39 among Michigan's asset classes.

Small washes and large projects

The middle half of loans spans $74,600 to $787,500, and the lender table explains the spread. The Huntington National Bank holds 45 of the 132 SBA 7(a) loans yet only $7.7 million in dollars, while Celtic Bank Corporation's 16 loans total $27.4 million and Old National Bank's 5 reach $12.5 million. That pattern suggests a long run of small washes changing hands or re-equipping, alongside a smaller set of large projects. SBA 504 carried 27 loans, led by Michigan Certified Development Corporation with 20 worth $11.3 million and Great Lakes Commercial Finance with 6 worth $7.3 million; Southern Michigan Bank & Trust adds 5 guaranteed loans. Franchise brands hold 3.8%. Macomb County leads with 34 approvals, Wayne has 25 and Oakland 21. FY2021 was the high point, at 26 loans and $31.9 million; FY2026 shows 9.

Outcome floors

Cancellation removed at least 13.7% of Michigan wash approvals from FY2017 to FY2024, and as many as 15.8% if every undisbursed loan is counted. Losses are low: 1.4% of the 72 Michigan washes funded over FY2017 to FY2021 have been charged off, all of it within five years of approval. Each is a floor on loans that remain open.

For a Michigan car wash, the feasibility study should be scaled to the deal. On a small acquisition it has to verify the wash's actual car counts and ticket mix and the cost of replacing worn equipment. On a large new build it has to test traffic counts, competing washes and membership plans, how volume swings across the seasons, and construction cost against the loan. Either way, debt service coverage must hold in a weak season, and the appraisal will rest on a special-purpose property whose value depends on the wash's income.

In SBA's records a Michigan truck wash or a mobile wash carries the same industry code as a fixed car wash, so the figures here mix all of them.