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

Kentucky repair shops and a Louisville core

Mechanical auto repair is sixth of 39 classes in Kentucky for SBA 7(a), with 73 loans from FY2017 to FY2026 worth $24.2 million. Kentucky stands 32nd among states by count. The $221,000 median runs 1.23x the national reading, and the middle half spans $69,200 to $420,000. Franchise brands appear in 11.0% of loans. Jefferson County, which holds Louisville, has 18 loans, with Campbell and Warren at 6 each, Oldham at 5, and Bell, Fayette, Kenton and Scott at 3 each.

Holders

U.S. Bank, National Association is far ahead of everyone else with 21 loans and $4.9 million. Community Trust Bank, Inc. has 8 loans for $1.4 million, Stock Yards Bank & Trust Company 6 for $2.0 million, and The Huntington National Bank 5 for $2.7 million. Huntington's $2.7 million over only 5 loans makes for the largest average ticket. The names reflect SBA's present-holder records and no more.

Outcome floors

The charge-off floor is notable: among the 35 early loans that funded, at least 5.7% are charged off so far, and 2.9% within five years of approval. Loans lost to cancellation have a floor of 13.3%, and the ceiling matches. A lender reading those together will see losses and failed closings both above the levels in some neighboring classes. Open loans may add to the numbers. Volume went from 8 loans and $1.4 million in FY2017 to 6 and $4.5 million in FY2021 and 5 and $3.2 million in FY2026.

Proving a Kentucky shop

A Kentucky repair shop study has to prove steady demand and a skilled crew. It should count the vehicles registered in the drive area, look at the dealers, chains and independents nearby, and test the shop's labor rate against technician wages. Equipment, lifts and diagnostic tools should be budgeted against a loan near $221,000, along with any real estate purchase. Because the charge-off floor is higher than for some other classes, a conservative case with slower ramp-up should show the loan payment still covered. The class also has a boundary: truck mechanics are grouped with car mechanics, but body, glass and lube businesses are classed apart and appear on other pages.