Quick Service Restaurant Feasibility Study in Virginia

Virginia's quick service loans are ordinary in size and weak in outcome. The median is $300,000, almost exactly the class's national median at 0.96x, and the middle half sits between $142,800 and $515,000. Over FY2017 to FY2026 the state approved 429 loans to limited-service restaurants for $198.9 million, 17 of 54 among states. Within Virginia the class ranks 2 of 39, and a location quotient of 1.15x gives it more weight in the state than nationally. Our margin test does not flag this cell, but its outcome rates still deserve a close look.

A charge-off floor above state and nation

Of 161 loans disbursed in FY2017 to FY2021, 9.3% have been charged off to date and 5.6% within the first five years after approval. That floor runs above Virginia's floor for all classes and above limited-service restaurants nationally, and it can still rise. Cancellation is high too: among FY2017 to FY2024 approvals, 15.2% fell through after approval, or 16.5% with loans not yet disbursed included, above the national rate for the class. A Virginia quick service project therefore faces lenders who have seen both deals that never closed and loans that did not repay.

Northern counties and franchise brands

Franchise borrowers account for 59.2% of loans, and the mix is 407 under 7(a) against 22 under 504. The Huntington National Bank (38 loans, $11.1 million) and Manufacturers and Traders Trust Company (36 loans, $5.1 million) lead, then Newtek Bank, National Association (17), Stearns Bank National Association (15) and Truist Bank (15). Business Finance Group, Inc. leads the 504 lenders with 14 loans for $10.5 million, ahead of 504 Capital Corporation (6). Fairfax leads the localities with 93 loans, followed by Loudoun (37), Prince William (30), Virginia Beach City (30) and Arlington (24). Approvals grew from 25 in FY2017, reaching 58 for $38.5 million in FY2025 and 55 in FY2026.

What a Virginia quick service study must show

Given that loss record, the study has to prove the unit can carry its payment in a crowded market. Demand should be measured site by site, with every competing brand within the trade area counted, and with land and labor costs in Fairfax or Loudoun built in. Cost must separate the build out, the equipment package and any remodel the franchisor requires. Test debt service coverage on sales below the brand's published averages and on a full staffing cost. Because 504 deals are rare here, the appraisal will usually cover leasehold improvements, and the lender will rely on cash flow, the franchise agreement and the guarantee.

The class has no limitation line; Virginia's loans sit under the industry code each borrower reported, and all of the rates are floors.