SBA 7(a) Auto Repair Shop Feasibility Study in Illinois

Where cancellation and loan size part ways with the norm

Two numbers set Illinois mechanical repair shops apart in SBA 7(a) lending. The median loan, $250,000, is 1.39x what repair shops borrow nationally, and the cancellation floor of 18.6% for approvals from FY2017 to FY2024 is the signature figure, climbing to 20.3% when loans not yet disbursed are counted. Elsewhere the numbers are ordinary. The record covers 343 loans and $147.4 million gross, with the middle of the range from $75,000 to $482,500. Illinois is 8 among states for this pairing, and the class holds the number 5 position of 39 inside Illinois. Franchise brands account for 8.2%. The class pairs car service with truck service because the code does not split them, and it leaves out body shops, glass, oil change and other automotive repair.

Lenders and the Chicago area

The Huntington National Bank has 51 loans worth $11.5 million, and U.S. Bank, National Association 45 worth $13.9 million. Newtek Bank, National Association follows with 22 loans and $4.7 million, Live Oak Banking Company with 20 and $20.8 million, and Byline Bank with 19 and $16.4 million. SBA's holder listing is silent on how any bank decides. Cook County has 152 loans, Kane 43, Will 34, DuPage 24, Lake 18 and McHenry 12, while Kankakee and Saint Clair each have 7, Sangamon 6 and Madison 5. Approvals dropped to 18 in FY2020, then reached 66 in FY2025 and 46 in FY2026.

Losses

Of 113 loans funded in FY2017 to FY2021, 5.3% stand charged off today and 2.7% were charged off within five years. Because open loans can fail later, both are minimums, and neither is the feature that distinguishes the cell.

What an Illinois repair shop study has to test

The high cancellation floor says deals in this class often unravel between approval and funding, so a study should deal with the usual causes in advance: a signed lease or clean title, zoning that allows repair bays, environmental review of a site that has stored fuel or fluids, and the seller's financial records in a purchase. Demand follows vehicles, so count registrations and the age of cars in the trade area, the traffic on the frontage road, and the competing independents, dealerships and chains. Technicians are the scarce input, and the study must say how many bays can be staffed. Compare equipment, lifts and diagnostic tools to a median of $250,000. Show debt service coverage with a slow ramp, and the appraiser may well value real estate and business on separate terms.