SBA 504 Restaurant Feasibility Study in New Jersey

New Jersey full-service restaurants under 504

New Jersey puts full-service restaurants first, at 1 of 39 asset classes, under the 504 program, though the state is only 18 among states by loan count. The cell holds 65 loans approved from FY2017 to FY2026, worth $61.0 million. At $813,000 the median loan reaches 1.34x of the nationwide 504 benchmark, so New Jersey borrowers take larger loans than most restaurants elsewhere, and the interquartile range runs from $479,000 to $1.2 million. Franchises are 1.5% of loans, which implies independent owner-operators buying or building the property.

Trenton and Empire State

Two development companies hold the record: Trenton Business Assistance Corporation with 38 loans worth $32.1 million, trailed by 20 loans worth $23.3 million at Empire State Certified Development Corporation. Monmouth County has 8 loans, Ocean 7, Bergen 6, and Burlington, Essex and Morris 5 each. The peak was 12 loans and $15.6 million in FY2022; FY2026 shows 4 loans and $2.8 million, while FY2020 had only 2 loans and $1.6 million and FY2021 rebounded to 8 loans and $6.1 million.

New Jersey restaurant approvals between FY2017 and FY2024 lost at least 16.1% before funding; the ceiling is 17.9%. No write-off rate appears for the funded FY2017 to FY2021 loans: the cohort holds too few loans for a rate to mean anything. Treat it as unknown, not zero.

Testing a New Jersey restaurant request

A 504 loan for a restaurant funds the real estate, so a New Jersey study should begin with the property: purchase price or construction cost, zoning, parking, liquor licence rules where relevant, and the condition of kitchen systems. The size of the typical loan suggests substantial projects, so the study should model sales by daypart, covers, average check, food and labour cost, and the effect of a weaker season. It should say who pays for equipment, inventory and working capital, items the debenture leaves out. Payments should be covered when sales run well below the owner's plan. The owner's operating record matters, as does an appraisal that values the building as a restaurant and as something else if the concept fails. The sponsor's licence status and kitchen experience should be documented, together with a realistic opening schedule, because carrying costs on a building run up before the restaurant earns anything.