Worked Example: SBA 7(a) Change of Ownership of an Express Tunnel Car Wash, Feasibility Study in Alabama

This is a worked example, not a client engagement. It follows a newly formed company that buys, in an asset purchase, one seven-year-old express exterior tunnel inside the City of Huntsville in Madison County, together with the land, the building and the membership base, from a founder who is selling. The loan is an SBA 7(a) change-of-ownership loan, and the example shows how a lender and a feasibility consultant would test it, with the sponsor's own pro forma printed beside the study's more cautious base case. No buyer, seller, lender, address or corridor is named; Huntsville and Madison County are context only, and every operating figure for the seller's year is an assumption set out in the tables.

At a glance. A 7(a) loan to buy an operating express tunnel passes both coverage tests, but only thinly, and the sponsor's equity lands just over the 35 percent cap these examples assume. The loan is sized on the seller's last fiscal year, so that test passes by construction, and the stabilized projection is the independent check.

• Total project cost: $5,839,949
• SBA 7(a) loan requested: $3,790,000
• Sponsor's equity share of total project cost: 35.1%
• Stabilized net operating income, base case: $646,455
• Debt service coverage on stabilized projections, base case (lender minimum 1.25x): 1.31x
• Debt service coverage on the seller's last fiscal year (program floor 1.25x): 1.25x
• Break-even volume at the binding minimum (percent of the base case): 96.9%

What a Feasibility Consultant Tests First on a Purchase Like This

A lender reading a change-of-ownership request does not begin with the market. It begins with the one set of numbers nobody on the buyer's side can improve: the seller's last fiscal year. In this example the seller's books are an assumption, not an observed record, and they are set out in Table 1: an assumed 3,200 average paying members at an assumed net price of $25.00 a month, membership revenue of $960,000, retail wash revenue of $392,113 and total wash revenue of $1,352,113. After the site's operating expenses are normalized the seller's EBITDA is $697,607, which is 51.6 percent of revenue, and the net operating income after a lender's management charge and replacement reserve is $616,480.

Everything else follows from that line. The price is a multiple of that EBITDA, the request is the loan that the net operating income supports, and the first coverage test is run on it. On the site's SBA program page, Initial Acquisitions, Owner Buyouts and ESOPs are tested on historical earnings against a 1.25x floor, which this example also assumes as the lender's minimum ^[1]. That page adds that history carries the test, whether one fiscal year or two averaged, and that forecasts cannot satisfy it ^[2]. The page's FAQ allows projections to meet the floor only "except for qualifying special-purpose property" but leaves "qualifying" undefined ^[3], so this example holds the historical test. This example never consulted the text of the SOP, so it rests on what the site's page says and on the federal regulations ^[2].

Since the seller's year sizes the loan, that test passes by construction: historical coverage is 1.25x against the 1.25x floor, an assumed lender minimum that matches it, and the net operating income clears the floor by $1,042 (Table 12). A pass built into the sizing proves little by itself. The independent test is the stabilized projection, where the base case reaches 1.31x against the same assumed minimum. A consultant therefore asks first whether the seller's year is real, because both tests lean on it.

Three questions follow. Are the assumed 3,200 members paying full price or an introductory rate? Does the stabilized year keep the same crew while volume grows only as fast as mature sites grow? And can the buyer fund the equity? The last answer is the least comfortable. Total project cost is $5,839,949 and the sponsor's equity is $2,049,949, which is 35.1 percent of it, just over the 35 percent cap that these examples assume, by $5,967 (Table 7). The rest of the study explains why, and what would break the case.

Decision. The study would size the request on the seller's books and treat the sponsor's higher figures as a forecast to be tested, because the books are the only evidence about this particular site.

Outside work is a loan condition the SBA can impose: 13 CFR 120.160(b) lets it ask for appraisals, a survey or a feasibility study ^[4]. With goodwill at 35.5 percent of the price, that study is what turns the seller's year into a base case.

The Car Wash Market in Alabama and the Huntsville Region

The national picture frames a purchase of this kind. Matthews' count stands at 12,029 confirmed operating conveyor washes across the country on September 23, 2026 ^[5]. Matthews' October 2026 tally has 87 percent of roughly 12,000 confirmed washes with another one inside three miles, though closeness by itself does not make a market overbuilt ^[6]. A Huntsville buyer should read both halves: the density is real, and it is not a verdict by itself.

Matthews reports that market saturation and site density have overtaken inflation and labor costs as operators' top concern, and that aggressive development across the Southeast has significantly increased local competition ^[7]. Alabama sits in that region. The supply side is also slowing: By Matthews' count, new car wash establishments net of closures numbered 991 in 2021 and 249 in 2025, and the largest fifteen companies together operate about 30 percent of confirmed locations ^[8]. For a buyer of an existing site, slower additions help, because fewer new tunnels arrive each year to compete for the same members.

The pricing evidence is the part a lender weighs most. Matthews reported in October 2026 that a good single express site changes hands at roughly 8 to 10 times EBITDA, real estate included, good express portfolios at roughly 10 to 12 times, and that condition, membership quality and location decide where a deal lands ^[9]. This example prices at the bottom of the single-site range, 8.0 times the seller's EBITDA, and the next section shows why that choice came from the equity cap and not from a view that the site is weak. Matthews also wrote in March 2026 that strategic buyers avoid the ramp-up risk of new car wash builds and pay premium multiples for stabilized, high-performing express operations ^[10]. An existing tunnel with a membership base is the stabilized product that sentence describes.

A September 2023 Matthews report says investors increasingly look for sites that already have a car wash on them ^[11], which helps the eventual exit as much as the entry. The same Matthews report says sellers often price washes under what it would cost to replace the building and business, and that an express wash usually costs $3 million to $5 million to build ^[12]. The real estate in this price, an assumed $3,100,000, sits inside that development range.

Operating costs have a state anchor. Alabama's commercial electricity price averaged 14.98 cents per kilowatthour ^[13]; the utility line in the model scales with cars washed. Alabama assesses Class II property, all property not otherwise classified, at 20 percent of value ^[14], and the Alabama Department of Revenue's October 2024 millage table for Madison County lists 6.5 state mills and 11.0 county mills ^[15]. The same table lists 5.5 school mills for the Huntsville school district and 35.0 municipal mills for Huntsville ^[16]. Applied to the assessed share of the real estate and equipment in the price, those four rates produce the $41,760 property tax line in the operating statement.

Several items a local buyer would want were not sourced: Alabama's own minimum wage rule, Huntsville water, sewer and pretreatment rates, traffic counts and local land prices. Where a figure stands in for one of them, such as the water, sewer and refuse line per car, it is labeled an assumption in Table 5.

Decision. The study would treat the market as competitive and well supplied, and would not let the growth of the metro area stand in for a rising membership price.

Supply and Public Comparables

A feasibility study tests the site against two kinds of public comparison: how many washes compete for the same drivers, and what a large operator's filings say about the economics of a tunnel. The first needs a count of local competitors, which this example does not have. The second is available.

The largest U.S. listed car wash operator, Mister Car Wash, Inc., leased 485 and owned 63 of its locations at the end of 2025 and operated 13 locations in Alabama ^[17]. Mister Car Wash reported 548 locations and 2,271,000 unlimited members at the end of 2025, and membership sales of 76 percent of total wash sales ^[18]. Dividing members by locations gives the 4,144 that the sponsor's pro forma uses as its member count: a chain average across a portfolio built for membership, and not a measurement of this site.

The same filing reports 2025 net revenues of $1,051,731 thousand and Adjusted EBITDA of $345,441 thousand, a margin of 32.8 percent, according to Mister Car Wash ^[19]. Mister Car Wash puts its cost of labor and chemicals at $302,307 thousand, 29 percent of net revenues ^[20]. Mister Car Wash's other store operating expenses of $436,674 thousand ^[21] bundle rent, depreciation, insurance, utilities and property taxes with card fees and repairs, as Mister Car Wash itself describes them ^[22]. Because the operator leases nearly nine locations in ten and this example owns its real estate, the right comparison strips rent out. Table 2 does that: store income before all lease expense and depreciation is 49.9 percent of revenue, an upper bound because part of the lease expense sits in general and administrative costs.

An advisory firm and a broker give single-site ranges. Car Wash Advisory states that a single-site express exterior car wash can generate adjusted cash flow (EBITDA) margins of 45 to 63 percent, mainly depending on the number of cars it washes ^[23]. Matthews wrote in March 2026 that car wash EBITDA margins of 40 to 50 percent are the benchmark for premium pricing ^[24], and in September 2023 that profit margins for express car washes can in some instances range from 40 percent to as high as 60 percent ^[25]. The seller's books in this example earn 51.6 percent before management and reserve, and the base case earns 52.4 percent, inside every one of those ranges and about two points above the operator's no-rent bound.

The reason the case sits above the large operator is labor. Matthews wrote in March 2026 that the most valuable car washes use automation to hold labor below 15 to 20 percent of revenue as wages rise ^[26]. In the seller's books labor is 19.2 percent of revenue, and in the base case 18.6 percent. O*NET OnLine's table of Bureau of Labor Statistics 2025 wages for cleaners of vehicles and equipment shows an hourly median of $13.31 in the Huntsville metro, $14.11 in Alabama and $17.23 nationally ^[27]. The case uses the metro median because nothing places this site's pay above or below it; a buyer who must pay the state or national figure would see the labor line move, which the expense shock later tests.

The sale-leaseback record gives a real estate anchor. Mister Car Wash completed nine car wash sale-leasebacks in 2025 for aggregate consideration of $48,423 thousand, with initial 20-year leases ^[28], and 29 in 2024 for aggregate consideration of $134,912 thousand ^[29]. Table 3 turns those into averages of $5,380,333 and $4,652,138 a property, mostly newer sites. This example assumes $3,100,000 of real estate for a seven-year-old site: 67 percent of the 2024 average and 55.5 percent of the purchase price. The choice is judgement, and the table shows how far below the operator's average it sits.

Chemicals have their own check. Car Wash Advisory puts the average U.S. chemical cost at about $0.40 to $0.65 per car washed ^[30], and the base case spends $0.55 a car; it puts a car wash's business insurance at roughly $15,000 a site ^[31], which is the insurance line used here.

Decision. The study would accept the seller's margin as plausible against public ranges, and would test labor and insurance first, because those are the two lines where this site is leaner than the large operator.

Demand in Madison County

Demand for a membership wash tracks households and vehicles. The Huntsville metro area ranked sixth among U.S. metro areas by percent population growth from July 1, 2024 to July 1, 2025, at 2.6 percent, reaching 556,444 residents against 491,721 at the April 2020 estimates base ^[32]. Madison County had an estimated 433,516 residents on July 1, 2025, against an estimates base of 388,158 on April 1, 2020 ^[33], which is growth of 11.7 percent over the period. That makes Huntsville the strongest sourced demand story in Alabama, and it is the reason this example stays in Huntsville and does not move to another metro to find a better site.

Building permits show the pipeline of new households. The county's 2025 permit record covers 2,866 single-family units, 6 units in two-unit buildings, 72 units in three- and four-unit buildings and 1,126 units in buildings of five or more units, 4,070 units in all ^[34]. New rooftops bring new drivers and, in time, new competing tunnels, so growth is a mixed signal for an incumbent.

The demand lens in Table 4 converts residents into vehicles. Alabama had 5,655,344 registered motor vehicles in 2024 ^[35] and the United States had 297,525,836 ^[36]. At the state's ratio of vehicles to residents, 1.09, Madison County would hold about 472,105 vehicles. At the national ratio of 24,734 vehicles per confirmed conveyor wash, that is 19.1 conveyor washes for the county. The lens is a ratio, not a census of Huntsville's tunnels, and the study would replace it with a driven count of competing washes inside a drive-time ring of the site.

The base case's 3,300 members, an assumption grown from the seller's books, equal 0.70 percent of those estimated vehicles, and the sponsor's 4,144 members equal 0.88 percent. Neither share looks implausible against a wash that serves a corridor, though neither is evidence of what this site draws.

The International Carwash Association says a professional wash is now the usual choice for nearly 80 percent of U.S. drivers, up from about 48 percent in 1994 ^[37]. Rinsed, via Matthews, measures average monthly membership churn at 7.8 percent, split between voluntary cancellations and credit card losses ^[38], while Matthews reports that approximately 90 percent of car wash members intend to renew ^[39]. One figure is a stated intention and the other a measured monthly loss, and a lender would weigh the measured one more.

Price is the member-quality question. Matthews relays AMP's finding that two thirds of new members join with a discount. In AMP's data, of the discounted members who signed between January and September 2025, roughly a third remained a year later, while Matthews reports full-price members stayed at a rate closer to half ^[40]. Matthews writes that a buyer will test whether a membership count rests on introductory pricing, which supports less income than the same count at full price ^[41]. That is why the example holds the net price at an assumed $25.00 in the seller's year and in every year after. International Carwash Association data, via Matthews, show nearly 79 percent of car wash customers remain open to price increases ^[42], and the base case takes no credit for that.

Rinsed, via Matthews, reports Q3 2026 retail-to-member conversion of 17.1 percent at locations with 4,000 or more members, 10.7 percent at locations with 2,000 to 4,000 members and 3.3 percent under 2,000 members ^[43]. An assumed 3,200 members places the site in the middle band.

Decision. The study would underwrite demand to the seller's own member count and net price and would treat any step to the listed operator's average as upside that the lender does not fund.

The Site and Its Condition

The example fixes the project type, not the parcel. It is an express exterior tunnel about seven years old, with free vacuums and a monthly unlimited membership, inside the City of Huntsville. Because the site is on public sewer, no state injection-well permit applies; the Alabama Department of Environmental Management states that permitted injection wells are commonly used for treated discharges from small car washes and laundromats located where a public sewer system is not available ^[44]. The sewer authority's pretreatment rules would apply instead, and those were not sourced.

A site of this age has already absorbed its first equipment cycle. The first version of this concept assumed a $120,000 refresh at closing for brushes and cloth, dryer motors, pay-station software and signage. The base case drops it: the buyer runs the tunnel as bought and replaces parts from the reserve, and Table 8 shows what that did to the equity share. The price of the cheaper scope is a condition question. A tunnel that needs the refresh in its first year has less cushion than the model shows.

Weather and seasonality matter. Matthews reported in September 2023 that weather and seasonality are a main risk of owning a car wash ^[45]. Membership revenue is 71 percent of wash revenue in the base case, a recurring floor, but a wet season still cuts retail traffic.

Alabama appraises taxable property other than Class III property at its fair and reasonable market value ^[46], and the model taxes the real estate and equipment at their values in the price. If the assessor lands elsewhere, the property tax line moves with it.

Decision. The study would require a condition report on the tunnel and the pay stations before sizing, and would hold repairs at 4.5 percent of revenue, an assumption for a site of this age.

What the 7(a) Rules Require for a Business Purchase

The regulatory frame is short, and every item rests on 13 CFR. Under 13 CFR 120.202 a 7(a) borrower may spend proceeds on part or all of an owner's interest in a business, or on a business itself ^[47]. Working capital, which is one line of this cost table, is also a permitted use ^[48], and so is the guaranty fee ^[49].

The guaranty may reach 75 percent of a loan above $150,000 ^[50]. A ten-year ceiling applies except where real estate or durable equipment is being financed ^[51], and the real property portion can stretch to 25 years ^[52]. The model splits the loan on that line: real estate on the long term, everything else on the short one. The maximum for any one 7(a) loan is $5,000,000, with a guaranty cap of $3,750,000 per borrower under 13 CFR 120.151 ^[53].

The fee has two parts. Under 13 CFR 120.220(a)(1)(iii), the guaranty fee on a loan over $700,000 may reach 3.5 percent of the guaranteed portion, and clause (iv) words an additional 0.25 percent for a loan over $1,000,000 ^[54]. The statute confines the addition to guaranteed dollars past the first $1,000,000 ^[55]. No fiscal 2027 fee notice was fetched, so this example uses the ceiling and the fee actually charged could be lower. Financed, it appears as $104,094 in the cost table.

Pricing follows the prime rate. Prime is the base, at 7.00 percent through the early-November window the H.15 release of November 9, 2026 covers ^[56], and a variable 7(a) loan above $350,000 cannot exceed that base by more than a 3.0 point margin ^[57]. The example assumes a margin of 2.75 percent, inside the cap, which makes the note rate 9.75 percent and the loan constant 12.99 percent.

The credit standard in the regulation is general. Section 120.150 wants repayment reasonably assured ^[58] and lists credit history and cash flow among the lender's considerations, with no numeric coverage minimum or equity floor ^[59]. Owners of 20 percent or more generally guarantee ^[60]. The coverage numbers therefore come from the lender and from the program page the site publishes.

The site's own methodology page judges coverage against a program-and-lender threshold, usually from 1.15x up to 1.25x, and this example assumes both ends as bounds ^[61]. A standard 7(a) loan faces the lower figure on the site's own SBA program page ^[62], but a business purchase faces the higher one on historical earnings ^[1]. The program floor and the lender's assumed minimum therefore coincide at 1.25x, and that minimum binds. Since the site's page says projections cannot meet the acquisition floor ^[2], an optimistic forecast cannot stand in for the seller's year. The site's page states the historical-earnings rule ^[1], and this example never consulted the SOP's own text.

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

Decision. The study would apply both tests, the historical floor from the site's page and the lender's assumed minimum on the stabilized projection, and would let the larger requirement set the loan.

SBA Lending Record for This Asset Class in Alabama

Loan Analytics keeps a loan-outcomes dataset built from the SBA's own loan-level 7(a) and 504 files ^[78]. 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 Alabama. 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.

Uses and Sources of Funds: The Cost of the Purchase, Goodwill and the Equity Share

The cost structure in Table 7 starts from the price. Applied at 8.0 times the seller's EBITDA, an assumed multiple at the low end of the Matthews range, the purchase price is $5,580,855. An assumed $3,100,000 of that is real estate, an assumed $500,000 is equipment as installed, and the residual, $1,980,855, is goodwill, which is 35.5 percent of the price and $1,744 per inherited member. Net operating income of $616,480 on that price is a yield of 11.05 percent.

Two soft lines follow: an assumed $95,000 for third-party reports and closing, and an assumed $60,000 of working capital for chemicals and payroll float. Add the financed guaranty fee of $104,094, charged on a guaranteed portion of $2,842,500, and total project cost is $5,839,949.

The request is the smallest of three numbers: $7,299,962, which the sponsor's pro forma would carry at the assumed lender minimum; $3,796,414, which the seller's books carry at the floor; and the $5,000,000 maximum. The books bind, and rounding down to a $10,000 step gives a request of $3,790,000, which is 64.9 percent of total project cost and 67.9 percent of the price. Sponsor equity is then $2,049,949.

That equity is 35.1 percent of the project, against an assumed cap of 35 percent. The overage is 0.1 of a percentage point, or $5,967 above the $2,043,982 the cap allows. Said plainly, this structure sits just over the cap, not inside it. The rounding step gave up $6,414 of loan, more than the overage: at the unrounded supported loan, with the fee recomputed, the share is 34.99 percent. That is a rounding artifact, and the case does not claim a pass on it; the printed figure is 35.1 percent.

The base case is not the first structure tried. Table 8 shows three. The first concept, at a central 9.0 multiple with a refresh at closing, needed 44.4 percent equity; dropping the refresh gave 43.2 percent; moving to the low end of the sourced range, 8.0 times, gave 35.1 percent. A stronger site was not an available fourth step, because Huntsville already holds the strongest sourced demand in the state and a better site would lift the seller's earnings and the price together. A smaller tunnel carries the same closing and working capital lines on a smaller price and would need a larger share. The seller's reason to accept the low end of the range is the discount-led membership: the assumed net price of $25.00 sits below the $30.31 upper bound in the operator's filing.

Collateral is thinner than the loan. The real estate and equipment in the price come to $3,600,000, and the loan sits $190,000 above them, so part of the $1,980,855 of goodwill is carried without hard assets behind it. A lender would take liens on everything and the personal guarantees the regulation generally calls for, and would still price the shortfall.

For orientation, the loan record the SBA itself keeps for Alabama car washes sits in Table 6; the request here is large next to a typical approval there, though below the program maximum.

Decision. The study would state the equity share of 35.1 percent as it prints and never round it to the cap, so the sponsor sees a structure just over the line and can answer it with a lower price or more cash.

The Pro Forma: The Sponsor's Figures Beside the Study's Base Case

The sponsor and the study share every input but two, and those two explain each difference in Table 9. The sponsor assumes the site reaches the listed operator's average of 4,144 members at the $30.31 upper-bound price in that operator's filing. The study holds the site to its own books: an assumed 3,300 members at an assumed $25.00, which is the assumed 3,200 grown about 1.5 percent a year for two years. Rinsed, via Matthews, reports revenue growth of 2.7 percent at sites that have been open two years or more in Q2 2026 ^[63], and 1.1 percent in Q3 2026 ^[64], so the assumed growth sits inside that band.

Membership revenue comes to $1,507,391 for the sponsor and $990,000 for the base case. Rinsed, via Matthews, puts memberships at roughly 71 percent of same-store revenue in Q3 2026, up from 66 percent a year earlier ^[64], so retail revenue follows in each column: $615,695 and $404,366. Total wash revenue is $2,123,086 in the sponsor's pro forma and $1,394,366 in the base case, which is 107 percent and 70 percent of the listed operator's revenue per location. Retail is no help to either column, since Rinsed, via Matthews, finds retail revenue at established locations fell in 19 of the last 24 months ^[79].

Table 10 prints the operating statement. Labor of $259,966 is identical in both columns, which is why the sponsor's margin looks better: the same crew spreads over far more revenue. Chemicals, utilities, repairs, card processing and marketing follow volume, while property tax of $41,760, insurance of $15,000 and an assumed $26,000 of accounting and administration are fixed. EBITDA before management and reserve is $1,312,789 for the sponsor, 61.8 percent, and $730,117 for the base case, 52.4 percent. After an assumed management charge and an assumed replacement reserve, both lender normalizations, net operating income is $1,185,403 and $646,455.

Card processing is a real line. Car Wash Advisory states that non-cash sales are typically about 80 percent of a car wash's gross sales and that card processing fees should run at roughly 2.5 percent and up on those sales ^[69]. The model assumes processing and membership software together at 3.0 percent of revenue.

The sponsor's 61.8 percent sits near the top of the 45 to 63 percent single-site range that Car Wash Advisory states ^[23], and the study does not carry it, because its volume is a portfolio average laid over a mid-sized single site. Were the sponsor's pro forma the base case, it would support $7,299,962 of debt, above the $5,000,000 maximum, which shows how much of the gap lives in two inputs.

The ramp in Table 11 is short because the site is bought operating. Year 1 is the seller's level, an assumed 3,200 members and $616,480 of net operating income, which is coverage of 1.25x, the assumed minimum met exactly. Year 2 reaches 1.28x and Year 3 reaches 1.31x. Nothing in it assumes the buyer improves the operation faster than a mature site grows.

Decision. The study would carry the base case in the loan and show the sponsor's pro forma only as a reference, because the two differ only in members and price.

Coverage Under the Convention, Sensitivity and Break-Even

Table 12 prints both tests. Debt service on $3,790,000 is $492,351 a year: $219,043 on the $2,048,343 real estate share over 25 years and $273,308 on the $1,741,657 remainder over 10 years. The seller's year gives 1.25x against the floor for an Initial Acquisition, in the wording of the site's own SBA program page ^[1], which an assumed lender minimum of 1.25x matches. The stabilized base case gives 1.31x, which is $31,017 of net operating income above that assumed minimum. The sponsor's pro forma would give 2.41x.

Which minimum binds? The two are equal, so the binding minimum is 1.25x, and the historical test sets the loan because the seller's books support $3,796,414 where the stabilized base case would support $3,981,008. Only the site's page speaks to the acquisition floor ^[1]; no text of the SOP was opened for this example.

For a loan sized below what the stabilized year could carry, the table also prints the four figures that belong together: the supported loan of $3,796,414, the fee recomputed on it of $104,274, the total project cost at that loan of $5,840,129 and the equity at that loan of $2,043,715, which is 35.0 percent. The request itself, rounded down to $3,790,000, carries a total project cost of $5,839,949 and equity of 35.1 percent.

Sensitivity is where the thinness shows. Table 13 shocks the stabilized year while the request stays fixed, since the loan was sized on the seller's books. Revenue down 10 percent gives 1.11x and down 20 percent gives 0.91x. A rate rise of 2 points gives 1.17x on the projection and 1.12x on the seller's year. Expenses up 10 percent give 1.16x. A retail decline matching the Q3 2026 same-store fall of 9.6 percent, which Rinsed reports via Matthews ^[64], leaves coverage at 1.25x, level with the assumed minimum. Every other shock takes the projection under that minimum, and the base case offers a cushion of $31,017 and no more.

The break-even table gives the same message from the other side. Coverage reaches 1.00x at 84.4 percent of base-case volume, which is 2,786 paying members and revenue of $1,177,138, or a net price of $21.40 at the base-case members. At the binding minimum the volume index is 96.9 percent: 3,197 members, which is 99.9 percent of the 3,200 assumed for the seller, with revenue of $1,350,645, or a net price of $24.28 at the base-case members. That sliver is the whole case. A buyer who inherits a handful fewer paying members than the assumed books show, or a net price a little under the assumed $25.00, no longer meets the minimum. Matthews writes that what matters is the cash left after debt service, rent, maintenance and the reinvestment it takes to stay competitive ^[80].

Decision. The study would call the case a pass sized to the seller's books, not a comfortable one, and would say so in the same breath as the 1.31x.

What Would Change the Answer

The first break point is the inherited member count and what each member pays. A count built on introductory pricing supports less income than the same count at full price, as Matthews writes ^[41]. If the assumed 3,200 members include many on discounts that expire, the realized net price falls under the assumed $25.00 and coverage on the seller's year drops under 1.25x. The loan is sized there, so the answer would be a smaller loan and more equity, which pushes the share further past an assumed cap of 35 percent. The first document to request from a seller is the membership roll by plan and start date, ahead of the profit and loss statement.

The rate is the second. The note floats at prime plus an assumed margin of 2.75 percent, and a 2 point rise takes the seller's year to 1.12x and the stabilized year to 1.17x. A lender would ask whether the sponsor can hold a rate reserve, and a separate case would model it.

The price is the third. The 8.0 multiple is the low end of the sourced range, and because the request is sized on the books, any step up in price lands entirely in equity. A seller who holds out for the central 9.0 times raises the sponsor's cash and not the loan; Table 8 shows 43.2 percent of the cost in equity at that level, far over the cap.

The cost lines are the fourth. A smaller closing or working capital line would bring the equity down to the cap, and a refresh of the assumed $120,000 would push it far above. The model adopts neither, since either would be chosen after the result was seen, and the figure for the first is not one the model prints.

Finally, the competitive set can change. A new tunnel within a few miles would pull on the member count and the price together, and Matthews notes that Southeast development has significantly increased local competition ^[7].

Decision. The study would name the verified membership roll, the rate and the price as the conditions of the case, and would not call the structure sound until the roll is verified.

Questions to Ask a Feasibility Study Company Before an Acquisition Loan

Does a seven-year-old express tunnel qualify for a 7(a) change-of-ownership loan?

The regulation allows it, since proceeds can buy a business outright ^[47]. Whether this purchase is financeable is a coverage question: the seller's year clears the floor by $1,042 and the stabilized year clears the assumed lender minimum by $31,017.

Which coverage test matters more, the seller's year or the projection?

The seller's year, for a purchase. Per the site's page, history carries the test: one fiscal year or two averaged, with forecasts unable to satisfy the floor ^[2]. The projection still matters as the independent check: 1.31x for the base case tells a lender whether the first year is representative.

How much equity does the sponsor need, and is it a problem that it is over the cap?

At the requested loan the equity is $2,049,949, or 35.1 percent of total project cost, $5,967 over an assumed cap of 35 percent. The cap is no program rule, since the regulation states no equity floor ^[59]; it is a sponsor-side limit of these examples. A lender would ask whether the extra cash exists, and whether the sponsor would sooner lower the price.

What happens if the rate rises?

The loan floats off prime, shown at 7.00 percent in the H.15 release of November 9, 2026 ^[56]. A rise of 2 points drops the seller's-year coverage to 1.12x in the sensitivity table, under the floor, so a lender would want a rate plan.

How should a borrower choose a feasibility study company or consultant for a car wash purchase?

Ask what the preparer tests first. For a purchase the answer should open with the seller's books and the membership roll, ahead of the neighborhood. Ask whether the draft rests its program rules on the regulation, labels anything taken from a program page, prints the sponsor's pro forma beside a base case and explains the gap, and says what would break the case. Ask to see arithmetic that recomputes from the inputs on the page. Be wary of any document whose conclusion looks settled before its inputs were. Firm size matters less than whether the work survives a lender's questions.