SBA 7(a) Auto Repair Shop Feasibility Study in New Jersey

Smaller loans and higher losses than the national pattern

New Jersey's mechanical repair shops show a median loan of $115,000 under SBA 7(a), only 0.64x the nationwide median for such shops, and a charge-off floor of 8.4% to date. The program approved 279 loans between FY2017 and FY2026 worth $94.0 million in gross dollars. Loans run from $50,000 to $426,000 across the central half. New Jersey is twelfth among states for the program and seventh of 39 within its own classes, and franchising reaches 3.6% of loans.

The outcome numbers

Among 107 funded loans in the cohort, 8.4% stand charged off today and 3.7% had been by the fifth anniversary. The gap suggests losses keep appearing after the fifth year, so borrowers should plan for a long horizon. Cancellation stood at 14.5% at the least for the approvals made through FY2024, rising to 15.0% with undisbursed loans included. Each figure is a floor while loans remain open.

Banks and counties

TD Bank, National Association is the clear leader with 90 loans worth $9.9 million, a book of very small loans, ahead of Manufacturers and Traders Trust Company, with 17 worth $1.3 million. Northeast Bank holds 10 worth $1.3 million, as does Wells Fargo Bank National Association, with $2.0 million, and Trenton Business Assistance Corporation holds 9 worth $1.7 million. SBA shows the present holder only. Bergen County has 35 loans, Essex 21, Middlesex 20 and Morris 20. Approvals dipped to 14 in FY2021 and reached 39 in FY2025.

The class boundary

Because trucks and cars share one code, truck service is mixed in with car repair here. Collision, glazing, lube shops and other repair trades are excluded.

Testing a New Jersey repair shop

The guarantee is broad, so a study has to say what is being bought. With loans this small, many borrowers are acquiring an existing shop or equipping a leased bay, and the study should compare the price with the shop's documented earnings. It should test traffic and visibility at the site, the competing shops within a short drive, technician supply and wages, and rent in a dense state. A charge-off floor of 8.4% argues for careful working capital: the study should show cash for slow months, and payment coverage on a conservative count of cars per week. Appraisers value the shop on what it earns, so the forecast should reconcile with tax returns.