SBA 504 Restaurant Feasibility Study in Indiana

The first class in Indiana, with the highest cancellation rate here

Indiana's SBA records put full-service restaurants first of 39 classes, and the 504 program's part of that is 86 loans worth $59.7 million, which places Indiana 13th among states for the program. What sets this cell apart is the cancellation rate: at least 22.1% of loans approved through FY2024 were cancelled after approval, and 23.5% if loans never disbursed are counted. That is unusual and worth explaining in any study.

The median loan of $459,000 is 0.76x the nationwide 504 typical for restaurants, and most loans range from $258,000 to $894,250. Franchise ties account for 15.1% of loans, so independent owners dominate. Because the 504 structure funds property and equipment, these are owners buying or building their premises rather than renting a dining room.

The development companies

Premier Capital Corporation holds 28 loans worth $15.6 million, and Indiana Statewide Certified Development Corporation 22 worth $22.4 million, a much heavier average. Regional Development Company holds 18 worth $11.3 million and Business Development Corporation (BDC) 12 worth $7.6 million. These are SBA's holder records, not an assessment of how any company evaluates a project. Lake County has 16 loans and Marion 12, with Hamilton and Tippecanoe at 5 each, Hendricks and La Porte at 4 and Allen at 3.

Approvals reached 14 in FY2018, slid to 4 in FY2023 and FY2024, and recovered to 11 in FY2025 with $13.6 million. Indiana's early 504 restaurant cohort has 40 loans and SBA shows no charge-offs among them, 0.00% on both measures. Treat both as floors drawn from a modest cohort.

What an Indiana 504 restaurant study must show

Since so many approvals fall away before funding, a study should prove the project is ready: land or building under contract, construction bids, permits and the senior lender's commitment. It should then test sales against the seat count and the trade area, and show how the payment on the combined financing is covered at a lower sales level. Property is the larger part of the cost, so the study should reconcile construction cost, the appraised value and the income the restaurant can earn, and explain gaps between them. For a franchised concept, include brand fees and required finishes in the budget. A restaurant's life is shorter than a building's, so state who could use the property if the concept failed.