SBA 504 Quick Service Restaurant Feasibility Study in Michigan

A franchise-heavy 504 book

Franchise brands dominate the SBA 504 limited-service restaurant loans made in Michigan. Franchises hold 77.8% of the 63 loans approved from FY2017 to FY2026, and the loans add up to $49.7 million gross. Michigan's median ticket of $740,000 lands at 1.16x of the national 504 figure for restaurants of this type, while the middle half of the book runs from $363,500 to $1.1 million. Counting loans, Michigan stands 8 among the states in this lane, and quick service restaurants stand 3 of 39 among Michigan asset types. The pairing separates two questions: the class is already a leading Michigan borrower, and inside the 504 program the state is a high-placing source of these loans.

Who holds the loans

Three names account for most of the visible lender table. Michigan Certified Development Corporation holds 38 loans worth $32.7 million, Great Lakes Commercial Finance holds 12 worth $8.0 million, and Oakland County Business Finance Corporation holds 8 worth $6.2 million. Under 504 these are development corporations rather than banks, and the holder named in SBA's file may differ from the party that originated a loan. By county, Wayne leads with 9 loans, then Oakland with 6, while Grand Traverse and Washtenaw follow at 4 each. Michigan's volume peaked at 13 loans and $13.3 million in FY2021, far above the 3 loans of FY2023 and the 5 of FY2026.

Outcomes and what the floors say

Michigan's cancellation rate after approval reached 15.1% across the FY2017 to FY2024 vintages; treating every undisbursed loan as cancelled pushes the ceiling up to 17.0%. Among the 32 disbursed loans in the charge-off cohort, SBA's loss tally for Michigan restaurants reads 0.00% to date, with 0.00% inside the five-year window. Both are floors, since loans remain open, and a single default would shift a rate built on this few loans. A clean record so far is a fact about timing as much as quality, and a lender will read it that way.

Testing a Michigan 504 restaurant

Work on a 504 restaurant here has to begin with the real estate, since this program finances fixed assets: the site, the building and the equipment package. Franchise-backed deals dominate, so the study should test the brand's unit economics against the actual trade area, including drive-time traffic, competing limited-service concepts and the sales a new location can reach. Construction or conversion cost has to be compared with the $740,000 median without assuming that a larger ticket earns a larger credit. Debt service coverage must hold with the 504 structure's payments, and the appraisal depends on a rent a restaurant tenant could plausibly pay. Because the program's rules are narrower than a general business loan, the study should also show that the project fits them.