Restaurant Feasibility Study in the Los Angeles-Long Beach-Anaheim, CA Metro Area

A market too large to ignore, priced like the nation

Full-service restaurants are the single most common kind of SBA-backed project in the Los Angeles-Long Beach-Anaheim area: the class holds 1 of 39 in the area's own ladder of asset classes, and the area holds 2 of 821 on the national ladder for these loans. From FY2017 to FY2026 SBA approved 1,635 of them, worth $963.0 million in gross dollars. What sets the area apart is scale rather than tilt. The location quotient is 1.01x, so restaurants take almost exactly the share of local approvals that they take nationally, and the median loan, at 1.09x the national median for the class, is only a little heavier.

Loan sizes, program mix and franchising

Half of Los Angeles restaurant approvals land between $150,000 and $707,500, around a $300,000 median, a spread covering a modest neighborhood room and a sizeable build-out alike. Program mix leans heavily to SBA 7(a), with 1,536 loans against 99 under SBA 504. Franchised concepts account for only 6.2% of loans, so most of this record belongs to independent operators. Los Angeles County supplies 1,185 of the loans and Orange County 450. Annual volume fell to 80 loans in FY2021 from 206 in FY2017, then climbed back to 208 in FY2025 and 180 in FY2026, when approvals reached $138.2 million.

Who holds these loans

Holders are listed as SBA currently records them, which need not be the originating lender; the holder note on the page repeats SBA's own wording. Under SBA 7(a), Bank of Hope holds 284 loans worth $118.0 million; U.S. Bank, National Association trails at 98, PCB Bank with 89, Hanmi Bank with 72 and East West Bank with 58. Among certified development companies in the 504 program, California Statewide Certified Development Corporation holds 26 loans and Business Finance Capital 23, the latter for $34.6 million. What the list reflects is SBA's bookkeeping of holders, loan by loan; it is silent on underwriting, and a borrower should not treat it as a guide to who will say yes.

Cancellations and charge-offs

The cancellation floor for loans approved in FY2017 through FY2024 is 12.3%, and the ceiling reaches 13.0% when undisbursed loans are treated as cancelled. Of the 691 loans approved FY2017 through FY2021 and later disbursed, at least 6.9% ended in charge-off so far, and 4.1% did so inside five years. Neither is final: loans still open can yet go bad, which keeps both figures at floor level. A charge-off rate of this size in the nation's second-ranked restaurant market is the figure a lender will put beside any pro forma.

Testing a Los Angeles restaurant

A feasibility study for a restaurant in this area has to prove demand at the specific site rather than lean on the size of the market, since nearly all of the record is independent and competitive. It must weigh fit-out spending against the $300,000 median, show debt service coverage in a slow opening year as well as a mature one, and give the appraiser revenue that the site can bear. Boundaries follow the July 2023 statistical areas assigned through each loan's project county; where a county cannot be placed, the loan is absent from every metro record.