SBA 504 Auto Repair Shop Feasibility Study in Illinois

Illinois garages under the 504 program

Illinois places 5 among states for SBA 504 automotive mechanical repair loans, while the class itself is 4 of 39 within Illinois. From FY2017 to FY2026, 85 such loans were approved, worth $36.7 million. Their median, $323,000, is 0.79x the nationwide 504 median, which makes the cell different from its parents on size: Illinois shops borrow noticeably less than shops elsewhere under this program. The interquartile range is a tight $221,000 to $476,000, and 5.9% of loans carry a franchise. Under 504 the shop's real estate or heavy equipment is financed in two parts, a bank first lien and a certified development company debenture.

Two development companies and the leading counties

Small Business Growth Corporation holds 47 of these loans, worth $20.4 million, and SomerCor 504, Inc. holds 27, worth $11.8 million. Between them they cover nearly the whole record. Cook County has 36 loans, DuPage 13, Will 9, Lake 8, Kane 6 and McHenry 3. The series is steady, between 5 and 12 loans every year, peaking at 12 loans and $8.1 million in FY2021.

Illinois shop approvals from FY2017 through FY2024 lost a floor of 17.1% to cancellation, and 18.6% at most once pending loans are included. Of 40 loans that went on to fund, none shows a write-off, so both measures read 0.00%. The pattern is familiar for 504 cells, with the risk concentrated before closing.

Testing an Illinois repair-shop request

Truck repair is indexed to the same code as car repair, and shops doing bodywork, paint, glass or quick oil changes are classed elsewhere, so the Illinois record is mechanical work for cars and trucks. A study should say which the shop serves, and test its trade area: vehicles registered nearby, competitors, bay count and technician supply. Because 504 lends against the building, the study needs a clear view of the property: its condition, zoning for repair use, and environmental history. Equipment and working capital are outside the debenture, so the study should say how they will be funded. The request is below the national median, so lenders will look for payments covered at modest sales. The study should also state the owner's technical background and whether the shop has a service manager, since the person who writes up repairs often decides repeat business.