Quick Service Restaurant Feasibility Study in Tennessee

Tennessee's leading SBA class

No asset class draws more SBA loans in Tennessee than limited-service restaurants: they rank 1 of 39 among the state's classes. The location quotient of 1.34x confirms that quick service takes a much bigger share of Tennessee's SBA book than of the nation's, even though the state itself ranks only 23 of 54 for the class, with 297 approvals worth $158.0 million from FY2017 to FY2026. Loans run somewhat larger than the national pattern: the median is $350,000, 1.13x the class median, while Tennessee's central half of approvals spans $150,000 to $626,000. Tennessee's median and both outcome floors are close to the state's all-industry figures and to quick service nationally, so the picture is mainly about how central the class is to the state.

A franchise market with a small 504 side

Franchising drives it: 60.6% of Tennessee quick-service loans went to franchised units. SBA 7(a) carried 282 loans and SBA 504 carried 15, with Brightbridge, Inc. the leading certified development company at 8 loans and $7.5 million. The Huntington National Bank leads Tennessee's 7(a) lenders with 50 loans worth $15.5 million, while Byline Bank and Citizens Bank hold 12 each and Pinnacle Bank 11. Davidson County leads with 61 loans, then Shelby with 45, Knox with 36 and Williamson with 35. Lending dipped to 18 loans in FY2019 and has since recovered, with FY2026 the best year of the decade at 40 loans and $25.2 million.

Floors, the cohort and the study

Cancellation took a floor of 12.3% of Tennessee quick-service approvals from FY2017 to FY2024; with undrawn loans included the ceiling is 15.5%, so a fair number of approved units were still waiting on funds. Of the 108 loans funded in FY2017 to FY2021, 6.5% are charged off so far and 2.8% within five years. The cohort is small, so a few failures move the rate, and both figures are floors. With a franchise share this high, the question a lender asks is not whether the brand works, but whether this unit will. For Tennessee, the study has to test the site's traffic and access, measure the population and workers within the drive-time the concept relies on, count competing units of the same and rival brands nearby, cost construction or conversion to the franchisor's standard, and show debt service coverage after royalties and rent through the opening ramp. For an owned site, the appraisal will depend on the land and the lease strength, which the study should document.

No limitation specific to limited-service restaurants applies. The rates shown are floors.