Restaurant Feasibility Study in New Jersey

Cancellation is the outcome to watch in New Jersey's full-service restaurant lending. At least 15.3% of New Jersey's FY2017 to FY2024 restaurant approvals were cancelled, and as many as 16.4%. It is the risk a borrower is most likely to meet. The class leads New Jersey's SBA list at 1 of 39, a location quotient of 1.15x tilts state lending toward restaurants more than the nation does, and the state ranks 8 of 54 with 1,203 approvals worth $796.4 million from FY2017 to FY2026.

A wide range of loan sizes

The median New Jersey restaurant loan is $300,000, 1.09x the national median, but the middle half runs all the way from $55,500 to $874,000, so loan sizes vary widely. Franchise units are only 5.7% of loans. TD Bank, National Association holds 180 of the 7(a) loans worth $26.3 million, while Fulton Bank, National Association holds 61 worth $76.4 million and Wilmington Savings Fund Society FSB 40 worth $39.2 million, the larger tickets in the book. Trenton Business Assistance Corporation leads 504 with 38 loans and Empire State Certified Development Corporation follows with 20. The New Jersey holder list comes from SBA's current servicing records. SBA 7(a) carries 1,138 loans and SBA 504 carries 65.

Losses and the volume cycle

The charge-off floor is 6.7% across 491 loans disbursed in FY2017 to FY2021, while just 2.9% of the cohort failed inside its first five years; a good part of New Jersey's restaurant losses came later in the loan's life. Approvals fell from 162 and $96.0 million in FY2017 to 60 in FY2020 and returned to 148 and $97.9 million in FY2025.

What a New Jersey restaurant study must test

Bergen County leads with 246 approvals, with Essex at 100, Monmouth at 95, Middlesex at 91, Camden at 86 and Hudson at 77, and Cape May has 46. In each of these counties, the study needs a cover count and an average check benchmarked against nearby dining rooms. Because cancellation is the main risk, it should arrive with the lease, any liquor license transfer and the construction bids settled, so the approval can close. Cost testing must match the deal's place in the wide size range. Size the coverage ratio on the operator's history or, for a new concept, on conservative covers. Any building in the deal needs an appraisal that holds up for a non-restaurant user too. New Jersey restaurant figures carry no coding caveat, and both rates are floors.