SBA 504 Auto Repair Shop Feasibility Study in California

By number of loans California leads every state in 504 lending to mechanical repair shops, and the class sits 5 of 39 within California. The cancellation rate and the median loan are the two metrics that set this cell apart. SBA approved 282 loans for $184.2 million in FY2017 to FY2026. Because 504 finances property and long-lived equipment, this view describes shops that own or build their premises, not those renting a bay. The $569,500 median is 1.40x what 504 shop borrowers hold at median across the country, with $387,500 to $797,250 as the middle half. Franchising is minor at 3.9%.

Development companies and counties

The 504 table names certified development companies. Business Finance Capital leads with 57 loans worth $43.6 million, The Mortgage Capital Development Corporation has 48 worth $36.4 million, California Statewide Certified Development Corporation 30 worth $20.9 million, CDC Small Business Finance Corp. 28 worth $16.1 million, and Bay Area Employment Development Company 22 worth $12.5 million. These are SBA records, not assessments. Los Angeles County has 66 loans, Riverside 22, San Diego 20, and Alameda and Orange 19 each. Volume has trended up to 39 loans and $32.1 million in FY2026, from 19 in FY2020.

Cancellation distinguishes the cell, charge-offs do not

Of FY2017 to FY2024 shop approvals, 5.7% at the least were cancelled, a share that reaches 9.1% if loans awaiting disbursement are counted, a gap showing how many projects sit unfunded for a while. Charge-offs stand at 0.00% to date among 111 loans funded in FY2017 to FY2021, and at 0.00% at the five-year mark. This is a floor from a limited period, and open loans can still fail, so it does not prove that such loans are safe.

Scope and the study to commission

Cars and trucks are lumped together because the codes cannot split truck service from car repair, and only mechanical work counts. Collision and paint businesses, glass installers, lube shops and the other automotive trades are not part of it. A California study for a shop buying or building its premises has to examine the vehicle base, shop competition, technician supply and pay, and equipment cost, but also the real estate: land price, zoning and permits, environmental history and construction cost. The payment test should combine the mortgage with the operating budget and include a slow first year. The appraisal will value the property on its own. Terms of the 504 loan itself are published by SBA, not repeated on this page.