Worked Example: SBA 504 Express Car Wash Feasibility Study in Maryland

This is a worked example, not a client engagement. The project is a new express exterior tunnel car wash in Frederick County, Maryland. Its financing has three layers under SBA 504: a bank first lien, a debenture from a Certified Development Company (CDC) and borrower cash. It sets out what the feasibility study behind that loan would test. Each market and program figure comes from a public publisher and each project figure is a stated assumption, so a borrower sees what 504 does to a car wash on the edge of coverage and a lender sees which inputs a study must defend. No operator, lender, CDC or address is named as a party.

At a glance. A ground-up express tunnel car wash in Frederick County, Maryland, with an all-in cost of $7,074,041, financed with a $3,119,375 bank first lien, a $1,931,916 gross 504 debenture and $2,022,750 of borrower cash (Table 4). With 3,000 paying members assumed, stabilized coverage is 1.23x, above the 1.15x program floor ^[1] but under the assumed 1.25x lender minimum, which binds, so the base case falls just short, and a 7(a) alternative at the program's $5,000,000 maximum covers only 0.99x (Tables 7 and 11) ^[2].

• Total project cost, all in: $7,074,041
• Bank first lien: $3,119,375
• SBA 504 debenture, gross: $1,931,916
• Borrower cash: $2,022,750
• Stabilized net operating income: $530,354
• Debt service coverage at stabilization: 1.23x
• Paying members needed for 1.25x coverage: 3,031

What a Feasibility Consultant Tests First on an SBA 504 Car Wash

The lender's question on a ground-up express tunnel is whether a new site with no operating history will sign and keep enough unlimited-wash members, at a net price after discounts, to carry two layers of 25-year debt from the month the tunnel opens.

A 504 structure sharpens the question. The typical split of permanent financing under 13 CFR 120.900 is a 10 percent borrower share, a 50 percent third-party loan share and a 40 percent 504 share ^[3]. That split moves against a start-up: under 13 CFR 120.910(a) the contribution rises to at least 20 percent when the business has two years or less of operation and the building is of limited or single purpose ^[4], and 13 CFR 120.920(a) then requires the third-party loan to be at least 50 percent of total project cost ^[5]. A newly formed company building a tunnel car wash meets both conditions, so this example is structured 20/50/30. Treating the tunnel as a single purpose building is itself an assumption: 13 CFR 120 gives no list of such buildings, and the CDC would confirm the classification.

Because the rules fix the debt shares, the consultant's first test is coverage, not loan-to-cost, and the only inputs that move income by much are the member count and the net membership price. Table 7 shows $530,354 of net operating income against $432,112 of annual debt service, a coverage of 1.23x, and prints the shortfall against the assumed 1.25x lender minimum as -$9,786 of income. Two minimums apply: a 1.15x program floor for 504 loans, measured on history or two-year projections, which the base case clears and which comes from the site's own SBA program page ^[1], and the assumed 1.25x lender minimum, which is the higher and so binds. The SOP itself was not read for this example.

The second test is what the 504 project can carry. SBA's program page lists long-term machinery and equipment with a useful remaining life of at least 10 years among eligible 504 uses ^[6] and states that a 504 loan cannot be used for working capital or inventory ^[7], so Table 4 places $775,000 of short-life equipment, reserve and closing costs outside the project, in cash.

The third test is the appraisal, which 13 CFR 120.160(b) lets SBA require as a loan condition alongside a survey or a feasibility study ^[8]; on a car wash the going-concern value tends to land below cost, and Table 7 shows why.

Decision. Coverage would size the structure, and the study would name the member count, the net price and the value-to-cost gap as the three items to prove: the 1.23x base case clears the 1.15x floor ^[1] but not the assumed 1.25x lender minimum, which binds.

The Site and Its Market in Maryland

The example is placed on about 1.3 acres on a suburban commercial corridor in Frederick County, with an assumed land cost of $1,500,000, because no Frederick County land sale was sourced. A real study would name the corridor and the parcel and pull traffic counts, trade-area population and income, zoning and stormwater rules. Those items are blank because the Maryland State Highway Administration traffic pages, the Census QuickFacts county page, the Maryland Department of Planning projections and the state rate page for assessments and taxation were unreadable at source for this example, so no figure from them appears.

What was sourced is the vehicle base. The Maryland Motor Vehicle Administration's monthly county dataset shows 275,566 registrations in Frederick County at the end of October 2026 ^[9], against 267,322 at the end of October 2023 ^[10] and 278,545 at the end of October 2025 ^[11]. Table 1 turns those into two growth figures: up 3.1 percent over three years and down 1.1 percent over the latest year. The fleet grew and then stalled, so each new member is won from an existing habit, not from growth.

The state fleet gives shape: the Federal Highway Administration's 2024 Table MV-1 puts Maryland's registered motor vehicles at 4,965,605, of which 1,908,452 were automobiles and 2,942,140 were trucks ^[12].

Labor is the one cost input with a sourced floor. The Maryland Department of Labor states that most employees must be paid at least the state minimum wage of $15 per hour ^[13], and it lists separate county minimum wage laws for Howard, Montgomery and Prince George's counties ^[14]; Frederick County is not on that list, so the state rate governs. The model assumes an average hourly wage of $17.00, above the floor, because a wash next door to Montgomery County will not keep staff at the minimum. Property tax is a labelled assumption of $60,000 a year, since no Frederick County rate is sourced.

Permitting is described from a broker's national view. Matthews wrote in September 2023 that car washes need multiple permits, including landscaping, demolition and grading, and a Stormwater Pollution Prevention Plan, and that zoning is the most significant barrier to car wash development ^[15]. The Maryland Department of the Environment's car wash discharge permit fact sheet and the COMAR stormwater regulations could not be fetched, so this example does not state what Maryland requires.

Decision. The study would use Frederick County as context rather than as the trade area, leave traffic, population, income and tax rate open until the Maryland publishers can be read, and take the stalled registration count as a reason to test the member count harder.

Demand: Members, Not Traffic Counts

Express tunnel demand is counted in members. Matthews, citing Rinsed's Q3 2026 report, puts memberships at about 71 percent of same-store revenue, up from 66 percent a year earlier ^[16], and in its June 2026 Southeast outlook Matthews describes a 75/25 benchmark gaining traction: about 75 percent recurring membership revenue alongside 25 percent retail wash traffic ^[17]. Mister Car Wash, the largest listed operator, reported in its fiscal 2025 Form 10-K that unlimited membership sales were 76 percent of total wash sales in 2025 and 74 percent in 2024 ^[18]. The example assumes a 72 percent membership share, between the Rinsed figure and the two higher marks.

The habit behind that revenue is broad and still forming. According to the International Carwash Association, the portion of United States drivers who usually go to a professional wash climbed from about 48 percent in 1994 to almost 80 percent ^[19]. The International Carwash Association's Q1 2026 Pulse survey also found that nearly 90 percent of members intend to renew an unlimited wash subscription ^[20].

The same sources describe the ceiling. Matthews, relaying Rinsed's Q3 2026 report, puts same-store revenue growth at 3.2 percent, the slowest in five quarters, with membership revenue up 9.8 percent, retail down 9.6 percent and total revenue up only 1.1 percent at locations open two years or longer ^[21].

Retention is the number a lender would circle. In Q3 2026, Rinsed's data as passed on by Matthews put average monthly churn among members at 7.8 percent, of which 4.5 percent was voluntary cancellation and 3.3 percent was lost credit cards ^[22]. Matthews also relays AMP's review of signups from January to September 2025, in which two thirds of new members joined at a discount ^[23]. So the assumed $27.00 per member per month is a net figure after discounts, and the member count is an average of paying members, not a count of sign-ups.

Conversion depends on scale: Matthews, citing Rinsed's Q3 2026 report, states that mid-sized locations with 2,000 to 4,000 members converted 10.7 percent of retail customers to membership, against 3.3 percent at locations under 2,000 members ^[24], and the assumed 3,000 average paying members puts this example inside the band where conversion works.

Table 1 is a lens, not a local census. It divides the Federal Highway Administration's 2024 count of 297,525,836 registered motor vehicles in the United States ^[25] by the 12,029 confirmed operating conveyor washes that Matthews counted as of September 23, 2026 ^[26], giving 24,734 vehicles per conveyor wash, and asks how many conveyor washes Frederick County's 275,566 registrations would support at that ratio: 11.1. The county's actual wash count was not sourced. A lender would weigh the last line: the assumed 3,000 members are 1.09 percent of the county's registered vehicles, a share one site on one corridor would have to win and hold.

Decision. The study would build demand from members and net price, hold the member count at the assumed 3,000 only if a drive-time census of competing tunnels supports it, and present the density ratio and the operator benchmark in Table 5 as cross-checks, not as evidence of local demand.

Competition: Density and the Three-Mile Question

Competition is the risk operators themselves rank first. The International Carwash Association's Q1 2026 Pulse survey reports that respondents increasingly cite site density and competition as their biggest concern for 2026, ahead of input costs and broader economic conditions ^[27]. Matthews' October 2026 report quantifies the density: of roughly 12,000 confirmed operating conveyor washes in the United States, 87 percent have another within three miles ^[28]. A study that finds no competing tunnel within three miles of a Frederick County corridor site would need to explain why no one has built there.

The building cycle has cooled and ownership has concentrated. Matthews counts 991 net additions of car wash establishments in 2021 and only 249 in 2025, and says the 15 largest operators together account for about 30 percent of the locations it has confirmed ^[29]. The International Carwash Association counts about 200 companies with ten or more stores, over 6,000 locations in all, and about 3,000 companies with one or two stores, the group this assumed project would join ^[30].

The scale of the largest competitor is public. Mister Car Wash reported 548 locations at the end of 2025, up from 514 a year earlier, with comparable store sales growth of 2.9 percent ^[31], and it leased 485 of those locations and owned 63 ^[32]. Leasing therefore dominates: if the operator fails, the buyers for a special purpose tunnel building are other operators who mostly prefer to lease.

Value follows. A September 2023 Matthews note says sellers often list car washes for less than it would take to replace the building and the business ^[33]. Table 7 applies Matthews' single-site range of 8 to 10 times EBITDA with real estate ^[34] to this example's income: $4,242,829 to $5,303,536 against total debt of $5,051,291.

No count of competing washes in Frederick County was sourced. A study would build its own competitor table: each conveyor wash in the drive-time area, its tunnel length, its posted membership price points, free vacuums or not, year opened, and whether it belongs to a multi-site operator. That table is the evidence the member assumption rests on.

Decision. The study would treat a competing tunnel inside three miles as the expected condition and test the member count against it, and would not accept a corridor as under-served on the strength of the national density ratio.

SBA Lending Record for This Asset Class in Maryland

Loan Analytics keeps a loan-outcomes dataset built from the SBA's own loan-level 7(a) and 504 files ^[35]. For this example's state and asset class it covers SBA loans approved in fiscal 2017 to 2026 to businesses coded to car wash, with the project in Maryland. The figures are the SBA program's record in the state, not Loan Analytics' work and not this hypothetical project. The dataset notes a limit on the class: car and truck washes, including mobile washes, share one code.

Cost Basis: What the 504 Project Can and Cannot Carry

Rounded to the dollar; lines may not foot by $1.

The cost basis has two parts, as the program does: the 504 project, shared by the bank, the CDC and the borrower, and the costs outside it, paid in cash.

The project lines are assumptions with no sourced bid or sale behind them (Table 3): land at $1,500,000 for about 1.3 acres; site work, utilities, paving and stormwater facilities at $925,000; a tunnel building of about 5,000 square feet at $1,750,000, covering about a 120-foot tunnel and an equipment room; tunnel and long-life equipment at $1,450,000, covering the conveyor, wash arches, dryers, water reclaim and vacuum system; and architecture, engineering, permits and utility connection fees at $285,000. Only equipment with a useful remaining life of at least 10 years is placed inside the project, the test SBA's program page states for 504 machinery and equipment ^[6]. The contingency is an assumed 5.0 percent of site work and building, inside the 10 percent of construction cost that 13 CFR 120.882(b) allows ^[51], and the assumed $195,000 of construction-period interest is inside the project because 13 CFR 120.882(d) counts repayment of interim financing as an eligible cost ^[52].

Table 4 sums the 504 project to $6,238,750 and splits it 20/50/30: a borrower contribution of $1,247,750, a bank first lien of $3,119,375 and a net debenture of $1,871,625. The debenture is then grossed up for the administrative costs the rule lets it finance. SBA charges a 0.5 percent guarantee fee on the debenture ^[38], $9,660 here. The CDC may charge a processing fee of up to 1.5 percent of the net debenture proceeds ^[39], used at the maximum, $28,074. The trustee, fiscal agent and transfer agent are paid from a funding fee that may reach 0.25 percent of the debenture ^[40], $4,830. The debenture may finance a CDC closing fee of up to $10,000 ^[41], used at the maximum. The underwriters' fee is the one administrative line 13 CFR 120 does not price, so the example assumes 0.40 percent of the debenture, $7,728. Administrative costs total $60,291 and the gross debenture is $1,931,916.

That gross debenture sits inside both program limits: the 40 percent of project cost plus 100 percent of eligible administrative costs that 13 CFR 120.930(a) generally allows ^[36], $2,555,791 here, and the $5,000,000 outstanding balance per borrower and affiliates under 13 CFR 120.931(a) ^[37]. It is smaller than the rule allows because the 50 percent third-party floor for a new business or single purpose asset ^[5] pushes the bank share up.

Outside the project, Table 4 carries three cash lines. Short-life equipment and technology (pay stations, plate readers, cloth and signage) is an assumed $260,000; these have lives under 10 years and fail the 504 equipment test ^[6]. The pre-opening marketing and operating reserve is an assumed $400,000, sized to the modeled shortfalls of the first two years in Table 8, and paid in cash because working capital is not a 504 use ^[7]. A single assumed line of $115,000 covers third-party reports, closing and financing costs. Together they are $775,000 and lift borrower cash to $2,022,750, 28.6 percent of the $7,074,041 all-in cost.

The only public development-cost range sourced is a September 2023 Matthews note that puts the usual development cost of an express wash between $3 million and $5 million and calls that cost a rising one ^[53]; this example's $7,074,041 includes the assumed $1,500,000 of land, the full reserve and three years of inflation beyond that note, so the comparison is directional, but it points the same way as the value multiples in Table 7.

Decision. The study would present the cost basis as two pools, show the gross-up of the debenture line by line so the CDC can check each fee against 13 CFR 120.971 and 120.883, and state the borrower's cash requirement as $2,022,750, not as the 20 percent contribution.

Revenue Build: Paying Members at a Net Price

Table 5 builds revenue from two assumptions and one ratio: an assumed 3,000 average paying members at stabilization, an assumed $27.00 of membership revenue per member per month net of discounts, and the assumed 72 percent membership share of wash revenue, which sets retail revenue as the remainder. Annual membership revenue is $972,000, retail wash revenue is $378,000 and total wash revenue is $1,350,000.

The price assumption is anchored from above. Mister Car Wash's fiscal 2025 Form 10-K reports net revenues of $1,051,731,000 with cost of labor and chemicals of $302,307,000, 29 percent of revenue ^[50]; the same Mister Car Wash filing reports 2,271,000 members at the end of 2025 and 2,124,000 at the end of 2024 ^[31] and membership sales at 76 percent of total wash sales ^[18]. Table 5 combines those into an upper bound of $30.31 of membership sales per average member per month; it is an upper bound because the 10-K does not separate wash sales from other net revenue. The example's assumed $27.00 sits below it, where a single new site whose members mostly join at a discount, as Matthews reports AMP found ^[23], should sit.

The scale assumption is anchored the same way. Table 5 prints the listed operator's 4,144 members per location and its $1,980,661 of net revenue per average location in 2025; the example's $1,350,000 is 68 percent of that, and the discount for a single new site is an assumption, not a market fact.

Car counts are a by-product. Table 5 assumes 3.0 member washes per month and a $15.00 average retail ticket to convert revenue into 108,000 member washes, 25,200 retail washes and 133,200 cars a year, about 365 a day. Neither input was sourced; the car count matters for stacking, vacuums and the water and sewer load, not for coverage.

Table 8 assumes 55 percent of stabilized members in year 1 and 85 percent in year 2. The shape follows Rinsed's observation, reported through Matthews, that sites open two years or longer grew total revenue only 1.1 percent in Q3 2026 while younger sites grew faster ^[21]: growth is front-loaded. At 1,650 average members in year 1 the site sits below the 2,000-member level where the Rinsed conversion data Matthews cites turns weak ^[24], which argues for front-loading the marketing reserve.

Decision. The study would name the member count and net price as the two assumptions that carry the case, anchor each to the public filing and the Rinsed series, and test both against a competitor table and trade-area census.

Debt Service Coverage and Sensitivity

Table 6 runs to $819,646 of expenses and a net operating income of $530,354, a 39.3 percent margin on $1,350,000 of revenue. Labor is the largest line at $302,646 and is built from assumptions: a site manager at $62,000, 5.5 hourly full-time equivalents at an assumed $17.00 an hour for 2,080 paid hours each, and an assumed 18 percent for payroll taxes and benefits. Chemicals and wash supplies are an assumed 7.0 percent of revenue, and with labor they are 29.4 percent of revenue, beside the 29 percent that Mister Car Wash reported for cost of labor and chemicals in 2025 ^[50]. Utilities, repairs, card processing and marketing are assumed percentages of revenue printed in Table 3; the fixed lines are the assumed $60,000 of property taxes, $28,000 of insurance and $24,000 of accounting, licenses and administration. Two lines an owner-operator might omit are charged: an assumed 3.0 percent management fee, since a lender underwrites the business as if a manager were paid, and an assumed 3.0 percent equipment replacement reserve.

Table 7 prices the two loans off the Federal Reserve's H.15 release. The 5-year Treasury constant maturity yield was 4.64 percent on November 6, 2026 ^[44]; with an assumed bank spread of 2.60 points, treated as fixed, the bank first lien carries 7.24 percent over an assumed 25-year amortization, $270,324 a year. The 10-year Treasury yield was 4.86 percent the same day ^[42]; SBA states that the debenture rate rests on an increment over the going market rate for 10-year Treasury issues ^[54], and the example assumes a 2.00 point all-in increment covering the ongoing SBA, CDC and servicing fees, giving 6.86 percent on the 25-year term SBA offers ^[43], $161,788 a year. Total annual debt service is $432,112.

Coverage is 1.23x, and Table 7 shows income $9,786 short of the assumed 1.25x minimum. The collateral lines are the harder reading. Using the Matthews range for a single site, 8 to 10 times EBITDA counting the land and building ^[34], applied here to income after the management fee and the replacement reserve, the indicated value is $4,242,829 to $5,303,536. Total debt of $5,051,291 is 119.1 percent of the low value and 95.2 percent of the high value, and the high value is 75.0 percent of all-in cost; the debenture is the layer above value at the low multiple.

Table 8 is the cash test. At an assumed 55 percent of stabilized members in year 1, revenue is $742,500, net operating income is $105,104 and coverage is 0.24x, a $327,008 shortfall after full debt service. At an assumed 85 percent in year 2, coverage is 0.90x and the shortfall is $43,508. The assumed $400,000 operating reserve covers both years, and Table 7 prints the balance left: $29,484. The model charges full amortizing payments from the first month, which sizes the reserve to the worst form of the schedule.

Table 9 moves one input at a time. Revenue down 10 percent, modelled as 10 percent fewer members, cuts coverage to 1.01x; revenue down 20 percent cuts it to 0.79x; both Treasury yields up 2 points when the debt is priced would cut it to 1.03x on $512,640 of debt service; every expense line up 10 percent would cut it to 1.04x. Only the 20 percent revenue case breaks 1.00x, and none of the four reaches the assumed 1.25x minimum: the project pays its debt in every ordinary scenario and clears the lender's cushion in none.

Table 10 states the break-evens in the two units that matter. Each paying member brings $450.00 of revenue a year including the attached retail at the assumed 72 percent share, and $315.00 of contribution after variable costs. Against $414,646 of fixed operating costs and $432,112 of debt service, the site covers its debt at 1.00x with 2,688 paying members, 89.6 percent of the base case, reaches the 1.15x program floor at 2,894 members, 96.5 percent of the base case, and reaches the assumed 1.25x lender minimum, which binds, at 3,031 members, 101.0 percent of the base case; in revenue, $1,209,654 and $1,363,980. Holding members at the assumed 3,000, the membership price that reaches 1.00x is $24.19 a month and the price that reaches the minimum is $27.28, against the assumed $27.00.

Decision. The study would report coverage at 1.23x as a near miss against the assumed 1.25x minimum, present the restructure in Table 12 and the $400,000 assumed reserve as the two levers the lender controls, and lead its conclusions with the member and price break-evens.

What the SBA 504 Rule Requires and How the Study Would Meet It

Every structural figure in this example traces to 13 CFR part 120: the typical 10, 50 and 40 percent split ^[3]; the 20 percent contribution for a business of two years or less building a limited or single purpose building ^[4]; the 50 percent third-party floor that follows ^[5]; the 504 ceiling of 40 percent of project cost plus eligible administrative costs ^[36]; and the $5,000,000 outstanding balance per borrower and affiliates ^[37]. Table 4 shows each test met, with the debenture of $1,931,916 against a ceiling of $2,555,791 and the bank loan at exactly the 50 percent floor.

Two eligibility rules shape the borrower rather than the budget. A landlord or developer that holds the assets without using or occupying them is ineligible under 13 CFR 120.110(c) unless it operates through an Eligible Passive Company ^[55]; an owner-run car wash is an active business, and if the real estate is held in a separate entity that leases to the operating company, the Eligible Passive Company rules govern the lease. For new construction, 13 CFR 120.131(a) requires the borrower to occupy at least 60 percent of the rentable property and permits permanent leasing of up to 20 percent ^[56]; the operating company here occupies the whole building.

The economic development objective is the rule a feasibility study company should raise with the CDC first. Under 13 CFR 120.861 a project must create or retain one job opportunity for each amount of 504 funding that SBA sets by Federal Register notice ^[57]; that notice was not retrieved, so no dollar-per-job figure is stated. One manager and about 5.5 hourly full-time equivalents is a thin payroll for a debenture of this size, so the study would more likely rely on 13 CFR 120.862, which makes a project eligible if it meets a listed community development or public policy goal and the CDC's overall 504 portfolio, including the subject loan, meets its required job opportunity average ^[58]; the goals listed include improving, diversifying or stabilizing the locality's economy, stimulating other business development and bringing new income into the community ^[59].

Eligible uses complete the rule set: equipment with a useful remaining life of at least 10 years ^[6], no working capital or inventory ^[7], a contingency inside 10 percent of construction cost ^[51] and interim financing repaid as 13 CFR 120.882(d) permits ^[52]; and, under 13 CFR 120.160(b), SBA may make a feasibility study a condition of the loan ^[8].

Table 11 answers a borrower's first question: why not 7(a)? The 7(a) maximum is $5,000,000 for any one loan ^[2], which would leave $2,013,750 of cash before the guaranty fee, almost the same as the 504 structure's $2,022,750. The difference is the price of the debt. Prime was 7.00 percent for the whole first week of November 2026 (November 2 to 6) ^[45], and the example assumes a 2.75 point spread, below the 3.0 point cap on 7(a) loans larger than $350,000 ^[60], for a 9.75 percent rate. Over the 25-year maximum term 13 CFR 120.212(c) allows ^[49], a term that favours 7(a) because an equipment share would carry a shorter one, debt service is $534,682 and coverage falls to 0.99x on the same income. The up-front fee is higher too. A guaranty of at most 75 percent applies to a loan over $150,000 ^[46], and the fee is capped at 3.5 percent of the guaranteed portion ^[47], so the ceiling is $138,125 against the $9,660 SBA guarantee fee on the debenture ^[38] (the fiscal 2026 fee notice was not retrieved, so the example assumes the ceiling). The regulation words the extra 0.25 percent as a share of the whole guaranteed portion ^[47], while the statute charges it only on the guaranteed share above $1,000,000 ^[48], and the example follows the statute's ceiling. The one advantage 7(a) keeps is flexibility of use, since it could fund the short-life equipment and working capital that a 504 loan cannot ^[7].

Decision. The study would recommend the 504 structure because it covers 1.23x where 7(a) covers 0.99x on the same income, and flag the economic development objective for the CDC before the application.

Risks a Lender Would Underwrite

• Saturation on the corridor. Matthews reports that 87 percent of confirmed conveyor washes have another within three miles ^[28], and the International Carwash Association's Q1 2026 Pulse survey ranks site density and competition as operators' biggest 2026 concern ^[27]. A second tunnel inside the trade area would move the member count, which Table 10 shows reaching 1.00x at 2,688 and the assumed minimum at 3,031.
• Retail decline and flat mature sites. Matthews, citing Rinsed, reports that in Q3 2026 retail revenue fell 9.6 percent and total revenue rose only 1.1 percent at locations open two years or longer ^[21]. The assumed 72 percent membership share may prove low in a mature year, which lowers retail revenue in Table 5.
• Churn and discount-led sign-ups. Matthews, citing Rinsed, reports 7.8 percent average monthly churn in Q3 2026 ^[22], and, citing AMP, that two thirds of new members join at a discount ^[23]. The assumed $27.00 net price is the exposed input; Table 10 shows $27.28 reaching the assumed minimum.
• A stalled county fleet. Frederick County registrations were 275,566 in October 2026 ^[9], down 1.1 percent from October 2025 (Table 1).
• Rate risk before the debenture is sold. The debenture rate floats on an increment over the 10-year Treasury ^[54], which was 4.86 percent on November 6, 2026 and ranged from 4.84 to 4.95 percent that week ^[42]. Table 9 shows both rates up 2 points cutting coverage to 1.03x.
• Value below cost. At Matthews' single-site multiples of 8 to 10 times EBITDA ^[34], Table 7 shows debt at 119.1 to 95.2 percent of value; Matthews' 2023 observation that car washes are often offered below replacement cost ^[33] says this is the norm.
• The ramp. Table 8 shows 0.24x coverage in year 1 and 0.90x in year 2. The assumed $400,000 reserve leaves $29,484 after the modeled shortfalls; a slower ramp than the assumed 55 and 85 percent would exhaust it.
• Permitting and zoning delay. Matthews described zoning as the most significant barrier to car wash development and listed the Stormwater Pollution Prevention Plan among required permits in 2023 ^[15]. The Maryland discharge permit and stormwater rules were not sourced, so this risk is unquantified here; delay moves the assumed $195,000 of interim interest and the opening date.
• The economic development objective. Whether the project qualifies under 13 CFR 120.861 or needs 13 CFR 120.862 depends on a Federal Register figure not retrieved here and on the CDC's portfolio ^{[57] [58]}.

Decision. The study would put member count and net price at the top of its ranking, the ramp reserve next and the value-to-cost gap last; member count and price settle whether the loan pays, while the gap settles what the lenders hold if it does not.

What Would Decide the Outcome

Three things would decide this marginal example.

The first is the number of paying members and what they actually pay. Table 10 shows the site covering its debt at 1.00x with 2,688 members and reaching the assumed 1.25x minimum at 3,031, against an assumed 3,000 at stabilization; in price terms, $24.19 a month covers the debt and $27.28 reaches the minimum, against the assumed $27.00. Market data make those narrow bands uncertain: Matthews, citing Rinsed, reports 7.8 percent monthly churn ^[22] and, citing AMP, discount-led sign-ups for two in three new members ^[23]. A study that cannot show from a competitor census and trade-area count why this corridor holds the assumed 3,000 paying members has not answered the lender's question.

The second is the ramp reserve. Table 8 shows year 1 and year 2 shortfalls of $327,008 and $43,508 against the assumed $400,000 reserve, with $29,484 left (Table 7). The reserve sits outside the 504 project because working capital is not an eligible use ^[7], so it is the borrower's cash.

The third is the value-to-cost gap. Table 7 shows indicated value of $4,242,829 to $5,303,536 at the Matthews single-site multiples of 8 to 10 times EBITDA with real estate ^[34], against total debt of $5,051,291, and the high value is 75.0 percent of the $7,074,041 all-in cost. The appraisal SBA may require as a condition ^[8] would be expected to land in that range, and the study should say so first.

Behind those three sit two things a lender can set rather than predict. One is the rate: Table 9 shows a 2-point rise in both Treasury yields cutting coverage to 1.03x, which argues for a rate lock on the bank side and a conservative increment on the debenture, whose rate is pegged to the 10-year Treasury when it is sold ^[54]. The other is the structure. Table 7 prints $90,338 of added cash on the bank loan as the arithmetic cure, but the bank loan may not fall below 50 percent of total project cost ^[5], so the restructure in Table 12 takes the cut from the debenture.

The restructure sizes the loan to what the base-case income of $530,354 carries at the binding minimum, rounded down to $4,950,000: the bank first lien stays at $3,119,375, the gross debenture falls to $1,830,625 with its fees recomputed to $57,647, total cost is $7,071,397, and borrower cash rises by $98,647 to $2,121,397, 30.0 percent of cost. Debt service of $423,629 then covers 1.25x, so the restructure passes both tests: it meets the assumed 1.25x lender minimum and clears the 1.15x floor from the site's own SBA program page ^[1].

Decision. On the base case, the study would find 504 financing workable only with the restructure's $98,647 of added borrower cash or a member base proven above the assumed 3,000, and without a competitor census and trade-area count for the corridor it could recommend neither with confidence.

Questions to Ask a Feasibility Study Company About an SBA 504 Car Wash

Why is this project financed under SBA 504 rather than 7(a)? Because of the price of the debt. Table 11 shows the 504 structure covering 1.23x where a 7(a) loan at its $5,000,000 maximum ^[2] covers 0.99x, with prime at 7.00 percent ^[45] and an assumed 2.75 point spread. Borrower cash is nearly the same under both, so the choice turns on debt service and the up-front fee, $9,660 on the debenture ^[38] against a statutory ceiling of $138,125 under 7(a) ^[48].

Why does the borrower need 28.6 percent cash when the rule says 20 percent? Because the 20 percent contribution under 13 CFR 120.910(a) is measured on the 504 project cost excluding administrative costs ^[4], and the 504 project cannot carry working capital ^[7] or equipment with a life under 10 years ^[6]. Table 4 shows $775,000 of such costs outside the project, paid in cash, which lifts borrower cash from $1,247,750 to $2,022,750.

What does a car wash feasibility consultant test that a generic consultant might not? Paying members and net price after discounts, not traffic counts. Matthews, citing Rinsed, reports that memberships are roughly 71 percent of same-store revenue ^[16], so a build from cars per day and an average ticket starts from the minority of the business. The consultant should also build a competitor table of every conveyor wash in the drive-time area, since Matthews reports that 87 percent of them have another within three miles ^[28].

How should a borrower choose a feasibility study company for an SBA 504 car wash? Ask three things: whether each project figure is given as an assumption with its basis, as in Table 3; whether the break-even is shown in members and in price, as in Table 10, since the lender can check those against the operator's dashboard after opening; and whether the firm splits the budget into project and non-project costs and raises the economic development objective under 13 CFR 120.861 and 120.862 with the CDC before the application ^{[57] [58]}.

Can the base case be made to work? Yes, by the restructure in Table 12: a $1,830,625 debenture and $98,647 more borrower cash reach the assumed 1.25x minimum. The other route is a member base proven above the assumed 3,000, since Table 10 puts the minimum at 3,031 members. An express tunnel under 504 is a coverage case decided at the margin by members and price.

Decision. The company worth hiring for this loan is the one that writes the 1.23x as a shortfall against the binding minimum and shows the restructure, because that is the version a CDC and a bank can act on.