SBA 504 Auto Repair Shop Feasibility Study in Colorado

Colorado garages under the 504 program

Within Colorado, repair shops hold 3 of 39 among the asset classes financed under 504, and the state is 6 among states by loan count. From FY2017 to FY2026, 73 loans were approved, worth $49.3 million. The median loan of $501,000 is 1.23x the nationwide 504 median, larger than the usual shop loan, and the interquartile range is $284,000 to $946,000. Franchise brands appear on 6.8% of loans. Under 504 the borrower's owner-occupied property is financed through a bank lien and a development company debenture.

One development company in front

B:Side Capital holds 52 of the 73 loans, worth $35.3 million, and Preferred Lending Partners holds 12, worth $7.9 million. Pikes Peak Regional Development Corporation holds 6, worth $2.9 million. A Colorado borrower therefore faces a short list of development companies, and the fit between the company and the project matters. The counties are Denver with 10 loans, El Paso with 9, Boulder, Jefferson and Larimer with 7 each, and Adams with 6. A peak came in FY2021, with 13 loans and $10.0 million, and FY2026 recorded 8 loans and $8.5 million.

Colorado repair approvals from FY2017 to FY2024 show at least 8.3% cancelled, with 10.0% as the upper bound. None of the 34 funded loans in the earlier cohort has been charged off: 0.00% so far and 0.00% in five years. Small cohort, floors, not forecasts.

Testing a Colorado repair-shop request

Heavy-truck garages are coded together with car repair, so the Colorado record includes them; body, paint, glass and oil change shops are separate classes. A study should therefore name the shop type and test its market: vehicle counts in the trade area, competitors, bay utilisation and technician supply. Since 504 funds real property, the study should document the building, its zoning for repair use, parking and environmental history. A borrower buying a larger building than the shop needs must show how excess space will be used. Payments should be covered at conservative sales, and a lender will want to know where the money for equipment and working capital comes from, since the debenture does not cover them. An appraiser should price the building as another occupant would see it, apart from the operating business. The owner's experience matters too: the study should show who runs the shop daily and how the foreman and parts supplier relationships will carry on if the owner is unavailable.