SBA 7(a) Car Wash Feasibility Study

Most SBA car wash lending runs through 7(a)

With 2,713 approvals from FY2017 to FY2026 and $3.84 billion in gross dollars, 7(a) carries the larger part of the SBA car wash record. 7(a) is, to a large degree, the whole car wash record. For washes approved in FY2017 to FY2024 the cancellation floor is 10.8%, and treating every approval still undisbursed as cancelled lifts it only to 11.6%. Among funded 7(a) washes the charge-off floor is 2.5% on the 1,337 wash loans disbursed from FY2017 to FY2021, with 1.5% of washes lost inside five years of approval.

A wide band of 7(a) car wash deals

The median 7(a) car wash loan is $789,000, but the middle half of approvals stretches from $150,000 to $2.4 million. The spread is wide. Celtic Bank Corporation is the current holder of 193 loans totalling $460.9 million and Metro City Bank of 103 worth $295.9 million, while The Huntington National Bank's 172 loans total $73.6 million, U.S. Bank, National Association's 97 come to $16.2 million and TD Bank, National Association's 93 come to $38.8 million. Franchise brands account for 3.1% of the loans. California has the most approvals at 406, ahead of Texas at 336, Florida at 208 and Georgia at 166. Volume peaked in FY2021 with 391 loans and $675.6 million, and FY2026 recorded 192 approvals worth $208.0 million.

Testing a 7(a) wash, built or bought

Because 7(a) can finance the purchase of an operating wash, business value included, the study has to begin with what the loan actually buys. For an acquisition, it should rebuild car counts and average ticket from the seller's point-of-sale records, measure membership churn, and price the conveyor, dryers and controls that will wear out before the 7(a) loan is repaid. For a new build, it has to show demand from traffic, access and the competing washes in the trade area, and set site work and equipment against current bids. Coverage needs a stress case: payments should still be met at a higher rate and a weaker season. The appraisal has to split real estate, equipment and going-concern value, so the lender can see how much of the loan rests on intangible value. One limit of the data: truck washes and mobile washes share the car wash code, so their loans are counted here as well.