SBA 504 Restaurant Feasibility Study in Ohio

Ohio sit-down restaurants through the 504 door

Full-service restaurants stand second in Ohio's SBA class ranking, 2 of 39, but the 504 program is a small channel for them: Ohio is 16 among states by count. Across FY2017 to FY2026, 70 such loans won SBA approval, adding up to $32.8 million. The loans are compact. A median of $364,000 is only 0.60x what 504 restaurant borrowers receive nationally, and the middle of the Ohio distribution is notably tight, running from $220,250 to $532,500. Franchised restaurants are 5.7% of the loans. What the cell shows, then, is an independent-operator profile with small, narrowly clustered real estate loans, which differs both from Ohio's wider restaurant record and from larger national 504 deals.

Development companies behind the loans

In a 504 package a development company places the second loan alongside a lender's first, so the table names companies rather than banks. Community Capital Development Corporation tops the table with 18 loans and $5.9 million. Alloy Development Co., Inc. has 16 loans and $11.4 million, a much larger average. Ohio Statewide Development Corporation ties Growth Capital Corp. at 12 loans each, with $5.1 million and $4.9 million, and Cascade Capital Corporation closes the table at 5 loans and $2.6 million. The rows record current holders and make no claim about any company's standards. Hamilton County has 11 loans, Franklin 7, Cuyahoga 6, and Delaware and Licking 5 each.

Cancellation and performance

Ohio's 504 restaurant cancellations start at 11.3% and could reach 14.5% if undisbursed loans are lost too. The 36 funded early-cohort loans show charge-offs of 0.00% so far and 0.00% at year five; loans still open could change that, so the zero is a minimum. Yearly dollars have stayed in a narrow channel, from $1.3 million in FY2017 to $4.6 million in FY2018 and $4.7 million in FY2022, rather than swinging as in larger-ticket cells.

Questions an Ohio restaurant study must answer

The 504 structure usually funds land, building and fixed equipment, so the study should show what real estate is being bought or built, and why a restaurant is the best use of it. Demand must be proven at the site: traffic counts, daytime and evening population, nearby employers and entertainment, and the supply of competing full-service restaurants within a short drive. The sales forecast should come from seats, turns and average check, with seasonal swings, and it should show the payment covered after occupancy, labor and food cost. Because Ohio loans cluster near $364,000, an application far above that band should explain the added scale, whether a larger building or additional land. The appraisal needs to value the property as a restaurant and as an alternative use, because restaurants are special-purpose buildings. An 11.3% cancellation floor signals that site control, permits and equity in hand deserve documentation.