Restaurant Feasibility Study in Indiana

No class draws more SBA loans in Indiana than the full-service restaurant: it is 1 of 39 in the state, with 626 loans for $272.3 million approved over FY2017 to FY2026. Indiana stands 17 of 54 among states for the class, and the location quotient is 0.96x. Indiana restaurant borrowers take smaller loans than the class nationally: a median of $229,500, or 0.83x, with the middle half from $70,275 to $536,500. Set against both the state and the class, the median and the outcome floors all fall inside our distinctness margin, so this page is about trend, lenders and losses.

A sharp drop and a slower recovery

Indiana approved 88 restaurant loans in FY2017 and 93 for $39.5 million in FY2018, then only 49 in FY2019 and 50 in FY2020. Counts have not returned to the earlier level, ranging from 56 to 66 in FY2021 to FY2025 and 45 in FY2026, but dollars have: FY2025 brought $36.5 million on 56 loans and FY2026 $32.2 million on 45, so recent loans are larger. The book is mostly 7(a), 540 loans against 86 under 504. The Huntington National Bank holds 122 loans for $29.4 million; 1st Source Bank (39 loans, $7.3 million), KeyBank National Association (28 loans, $16.5 million), Centier Bank (24) and Stock Yards Bank & Trust Company (17) follow. Premier Capital Corporation (28 loans) and Indiana Statewide Certified Development Corporation (22 loans, $22.4 million) lead the 504 side. Franchise borrowers are 18.7%. Marion County has 108 loans, then Hamilton (56), Lake (49) and Allen (40).

Losses and cancellations

Of 294 Indiana restaurant loans disbursed in FY2017 to FY2021, 4.1% have so far been written off, and 2.7% within five years. That floor is above Indiana's across all classes but below full-service restaurants nationally. Cancellation after approval was 10.7% among FY2017 to FY2024 approvals; counting loans still waiting to fund lifts it only to 11.2%, so few recent approvals remain undrawn.

What an Indiana restaurant study must answer

Because loan counts fell and sizes rose, a lender will ask why this project needs the dollars it does. The study should tie every line of the budget to the concept: kitchen, dining room, bar, and the building if it is being bought. Demand should be shown as covers and check size, set against competing dining rooms in the same trade area, whether that is Marion, Hamilton or a smaller market such as Vanderburgh. Coverage of debt service has to hold on the slower months and on current wage and food costs. Where the deal includes real estate, value it in the appraisal for a buyer who is not this operator.

The class has no limitation line; each Indiana loan carries the code its borrower picked, and the rates are floors.