Car Wash Feasibility Study in Virginia

The one cell with a visible loss rate

Virginia car wash lending stands near the national middle on size, but it carries the first loss figure we can print with confidence. SBA approved 65 loans from FY2017 to FY2026, worth $87.6 million, with a median of $920,000 at 0.99x of the class norm nationwide and a location quotient of 1.01x, so both match the country almost exactly. Virginia ranks 15 of 53 for car wash lending and the class is 14 of 39 among its asset classes. Of the 35 loans that funded in the earliest cohort, 2.9% were written off by the data cut, and so were 2.9% inside five years of approval. Both are floors. Nothing here passes the distinctness bar, but the loss figure deserves a lender's attention.

Cancellations, program split and lenders

Cancellation shows a floor of 14.0% for approvals from FY2017 to FY2024, rising to a ceiling of 17.5% when loans still undisbursed are counted as lost, a wider spread than most cells show. The 7(a) program accounts for 45 loans and the 504 program for 20. Business Finance Group, Inc. leads the development companies with 11 loans and $12.2 million, followed by 504 Capital Corporation with 7 and $4.0 million. Manufacturers and Traders Trust Company shows 7 loans and $2.8 million among 7(a) lenders, and Hanmi Bank shows 5 loans but $17.4 million, evidence of very large individual tickets. Half the approvals sit between $274,000 and $1.9 million, and franchises are 4.6% of loans.

Where and when

Loudoun County has 6 loans, while Hanover, Prince William and Virginia Beach City have 5 each, so there is no single dominant market. The annual record slid from a high of 11 loans and $17.8 million in FY2021 to 2 loans and $1.2 million in FY2026, and FY2018 delivered $15.4 million across 9 loans.

What a study has to test

With a measurable charge-off rate in the record, a Virginia study should explain how the project avoids the failures behind it. Start with volume per site: traffic counts, competing washes within the same drive time, and the realistic mix of memberships and single washes. Then test the cost side, including water supply and sewer connection, chemical and energy cost and the labour needed for an attended format. Debt service coverage must hold when volume comes in below plan than planned and when a competitor opens nearby, and a stress case is more useful than a forecast. The appraisal depends on land value and on income that remains unproven for a new site, so the lender will weigh the equity put in.

A coding limit

Truck washes and mobile washes sit in the same code as car washes, so formats cannot be split.