SBA 504 Warehouse Feasibility Study in California

California public warehousing under 504: the top-ranked state

By loan count California is first among states in the warehouse and distribution class under 504, but that class sits only at 24 of 39 within California. SBA recorded 33 approvals worth $59.4 million. A median of $1.3 million is 1.05x the nationwide level, with most loans from $720,000 to $2.2 million. Franchising is 9.1%. Because only 33 approvals stand behind the class, one large loan can move the dollar total, and the median of $1.3 million is the steadier guide. A reader should look at the lender roster, the geography and the narrow definition of the class.

Development companies and the big counties

The development companies shown are Business Finance Capital ($11.8 million over 7 loans), CDC Small Business Finance Corp. ($8.6 million over 7) and The Mortgage Capital Development Corporation ($11.8 million over 6), taking the holders as SBA now records them. Los Angeles County has 8 loans, Alameda and San Bernardino 5 each, San Diego 3 and Imperial 2. Approvals reached 6 loans and $8.9 million in FY2020 and 3 loans and $8.3 million in FY2026.

Neither outcome rate is printed for California's warehouse loans: each cohort is under 30 loans, a bar Loan Analytics sets, and neither blank is a zero.

What the code excludes, and what the study must test

This class means public warehousing only. When a manufacturer or distributor owns and uses its own warehouse, SBA codes the loan to that business's industry, so these loans are not the whole of California's warehouse financing. A study for a 504 warehouse should first say whether the borrower is an operator or a landlord, then test the property and the tenant or operator: building cost, clear height, dock doors, truck court and power, together with the location's access to ports, rail and freeways. If the borrower is a third-party operator, the study should show contracts or the pipeline of customers; if it rents space, the study should show market rents and vacancy for comparable buildings. Show coverage after both debt payments, bank and development company, using a slow lease-up. The appraisal should rest on market rent and cap rates, and the study should support them.

The study should show land value, any seismic or environmental condition, and why the specific submarket supports the rent assumed.