Restaurant Feasibility Study in Utah

Utah's largest class, underweight against the nation

Utah presents a paradox. Sit-down restaurants top Utah's SBA class ranking at 1 of 39, yet the location quotient is only 0.58x, so restaurants hold well under their national share of Utah's SBA loans. The state ranks 25 of 54 for the class, with 357 loans and $217.5 million approved from FY2017 to FY2026. Loan size differs from both Utah's wider SBA lending and sit-down restaurant lending nationally: the median loan is $341,000, 1.24x the national median, with an interquartile range from $125,000 to $898,000. Utah's restaurant borrowers ask for more than the national norm.

Of the 357 loans, 86 were 504 loans and 271 were 7(a). Zions Bancorporation, National Association holds 48 of the 7(a) loans for $13.0 million, Mountain America FCU 33 for $6.3 million, Celtic Bank Corporation 20 for $10.9 million, America First Federal Credit Union 19 for $16.8 million and First Utah Bank 15 for $9.3 million. Credit unions are a large part of this lender list. Franchised restaurants make up 9.8% of loans, so most loans are not franchised.

Low cancellation, low losses

Utah restaurant deals tend to close and then repay. Cancellations claimed only 7.6% of FY2017 to FY2024 approvals, and 7.9% at the ceiling. Among the 159 loans disbursed from FY2017 to FY2021, charge-offs are 2.5% to date and 1.3% within five years. Volume was steady, from 25 loans and $12.3 million in FY2020 to 39 loans and $37.4 million in FY2023 and 47 loans and $24.3 million in FY2025.

What a Utah restaurant study must establish

Salt Lake County leads with 155 loans, followed by Utah County with 54, Washington with 37, Davis with 22 and Summit with 18. Demand has to be built from the households and workers the site draws. Cost covers land and building where 504 is used, plus kitchen, dining room and opening reserves. The coverage test should carry the full occupancy cost of owning the real estate, not just rent. The appraisal must support the building as restaurant property and consider its value to another operator, which is the collateral a 504 lender relies on.