SBA 504 Quick Service Restaurant Feasibility Study in Texas

Franchised, and tightly clustered in size

Brand-led and compact: that describes Texas limited-service restaurants on SBA 504. Franchises sit behind 73.9% of the 92 approvals made over FY2017 to FY2026, and the total comes to $78.4 million. A $774,500 median, 1.21x the 504 reading nationally for this class, is hemmed in by a central half of $619,000 to $964,250, a narrow band. Texas is 4th among states by count, though the class is 6th of 39 inside Texas.

Who holds them, and where

Capital Certified Development Corporation has 30 loans and $27.2 million, and LiftFund, Inc. 16 and $15.6 million. North Texas Certified Development Corporation has 15 for $14.5 million, Greater East Texas Certified Development Company has 7 for $5.2 million, and Caprock Business Finance Corporation, Inc. has 6 for $3.6 million. Tarrant County leads with 11 loans. Harris has 6, Taylor, Travis and Williamson have 4 each, and Bexar, Guadalupe, Henderson, Jefferson and Montgomery have 3 each.

The floors in the Texas record

Cancellation is the measure that sets this cell apart. Cancellation after approval is floored at 5.4%, and at 8.1% when undisbursed loans are counted. Texas quick-service borrowers who funded early, 41 loans, show 0.00% charge-off by either yardstick; that is a floor, never a promise. Annual flow was 8 loans and $4.4 million in FY2017, 19 and $14.6 million in FY2021, and 9 and $8.7 million in FY2026.

Testing a Texas quick-service build

With a median near $774,500 and 504 financing tied to real property, the project involves land and building, and the study should treat the site as the main decision. It should test the traffic count and visibility at the pad, the access and turning movements at the drive-through, competing brands within a short radius, and the sales volume a Texas location of this brand needs for debt service on the building. Where a franchisor has performance data for comparable locations, the study should draw on it and say so. Program rules concerning ownership of the property and its use are matters for the development company and are not stated numerically here. The appraisal values the finished building and land, and it may differ from the cost of construction.