SBA 504 Auto Repair Shop Feasibility Study in Texas

Texas, the eighth largest 504 market for mechanical repair

Texas sits at 8 among states by number of 504 loans for shops fixing cars and trucks, with 56 approvals and $33.8 million across the whole window, while the class occupies 10 of 39 places on Texas's list. What the data adds beyond the all-class Texas record is a ticket size above the national norm and a lender field made up almost entirely of development companies. The median loan is $485,000, which is 1.19x the national 504 median, and typical loans run from $305,750 to $741,000. Franchise affiliation reaches 7.1% of loans, more than a rare exception but well short of a franchise-dominated class.

Counties, holders and dollar size

Dallas County leads with 7 loans, followed by Bexar, Collin, Denton, Tarrant and Travis with 4 each, then Fort Bend, Harris and Lubbock with 3. That spread across the large metro counties and a West Texas county shows that shop ownership financed this way is not confined to one region. Capital Certified Development Corporation holds 11 loans and $4.2 million, Greater East Texas Certified Development Company 10 and $5.4 million, LiftFund, Inc. 8 and $7.5 million, and North Texas Certified Development Corporation 8 and $5.2 million. The differences in dollars per loan among these holders are large, so loan-level size varies a good deal from one development company to another. These are SBA's records of loans held now, not a description of each company's approach.

Annual pattern and outcomes

Approvals ranged from 3 in FY2024 ($941,000) to 9 in FY2018 ($4.7 million), with 7 each in FY2019, FY2022 and FY2025. Dollars were lowest in FY2023 relative to count, at $1.9 million on 4 loans. For loans approved through FY2024, the minimum cancellation rate is 13.3%, which rises to 20.0% when approvals that never disbursed are folded in as cancelled. No charge-off rate appears for Texas: the older loans are too few in number to publish a loss measure, so none is estimated and none is zero.

Coding limits and what the study must test

Heavy-duty garages share a single industry code with passenger-car shops, which means the class blends light-vehicle shops with heavier-duty garages; body, paint, glass, oil change and miscellaneous repair are counted elsewhere. A study for a Texas shop should therefore state which vehicles the bays are built for, since lift capacity, bay height and door size change the building cost. It must test the vehicle population and traffic within the trade area, competing independents and dealer service departments, and the technician labour the shop can actually hire. Revenue should be built from bays, billable hours and average repair order, then run through debt service with a slower opening year. Because a 504 loan finances the property, the study should also show what the appraiser will say about the building's value if it is leased or sold as a garage.