SBA 504 Restaurant Feasibility Study in Rhode Island

The class that leads Rhode Island

Restaurants stand first among Rhode Island asset types for SBA 504, a rank of 1 of 39, and the state ranks 22 nationally for the class under the program. The file holds 55 loans from FY2017 to FY2026, worth $30.7 million. The median loan, $434,000, comes to 0.72x of the 504 median for restaurants nationally, so Rhode Island restaurateurs borrow less per loan than their peers elsewhere while leading the local list. Half of the Rhode Island loans fall between $254,500 and $691,500, and franchises account for 7.3%. In plain terms, this is a program used often and in modest amounts.

A small state with three development corporations

The table of holders reads Ocean State Business Development Authority first, at 27 loans and $16.7 million, then Bay Colony Development Corporation at 17 and $9.2 million, then New England Certified Development Corporation at 7 and $3.3 million; SBA names the current holder of each loan. Geography is compact: Providence County has 24 loans, Newport has 12, Kent has 9, Washington has 8, and Bristol has 2. Annual counts fell from 11 in FY2018 to 3 in FY2023, then settled at 5 in FY2024.

Outcomes

Cancellation took 22.2% of approvals from FY2017 to FY2024, and if loans that never disbursed are also counted the ceiling is 22.2%. That is a high figure for the program, and a borrower should expect some plans to fall through before closing. No charge-off rate is shown: the number of funded loans in the early cohort is below 30, and the rate stays withheld, not nil.

What a Rhode Island study has to test

For a 504 restaurant the property is central, so the study should price the building or site against the $434,000 median and ask whether the lot supports parking, which in a dense state decides covers. Seasonality matters, because coastal counties such as Newport and Washington see summer and tourist swings, while Providence depends on year-round local trade. The study should present sales by season, the labor model and the food-cost assumption, and then show debt service covered in the slowest quarter. An appraiser will treat the property apart from the business running in it, and the study should help by showing the rent a different restaurateur could pay.