Restaurant Feasibility Study in South Dakota

South Dakota's leading class, with heavy 504 use

Full-service restaurants rank 1 of 39 in South Dakota's SBA lending, though the state ranks 48 of 54 for the class on 91 loans and $41.1 million over FY2017 to FY2026, and the location quotient of 0.81x is below national weight. The median of $317,000 is 1.15x the national midpoint, and no figure lies far from South Dakota's wider SBA record or from full-service lending nationally.

Certified development companies and Sioux Falls

Of the 91 loans, 37 went through 504 and 54 through 7(a). Dakota Business Finance holds 18 of the 504 loans for $10.9 million, Ally Dakota Development, Inc. 14 for $8.5 million and South Dakota Development Corporation 5. The First National Bank in Sioux Falls leads 7(a) with 11 loans; First National Bank of Omaha holds 6, and First Bank & Trust, Black Hills FCU and First Interstate Bank 5 each. Minnehaha County has 33 loans, Pennington 12 and Lincoln 6. The middle half spans $150,000 to $589,000, and franchises take 12.1%.

Floors on a small cohort

South Dakota's loss cohort is 39 loans disbursed over FY2017 to FY2021; 7.7% are charged off to date and 5.1% within five years. Cancellations reached at least 12.5% of approvals dated FY2017 to FY2024, the same at the ceiling, and the study should say how the borrower will close on time. All are floors, and the small cohort means each loss moves the rate. For a borrower, the record shows losses at meaningful rates, and the plan has to carry a slow year.

A South Dakota restaurant study has to measure demand in a smaller market: residents and workers in the draw area, and the restaurants already competing. Budget lines for a South Dakota project include the building or purchase, the kitchen fit-out and opening expenses. Coverage should hold at realistic covers and checks through a slow period. Where 504 finances the building, its appraisal turns on what a different restaurant or retailer could do with it, and the study's value should line up. Full-service restaurants have no coding caveat, and each lender is named as the loan's current holder.