SBA 7(a) Car Wash Feasibility Study in Florida

A wide range of project sizes

Florida car washes financed under SBA 7(a) number 208 loans and $300.6 million for FY2017 to FY2026. The loans vary enormously: the median is $619,500, which comes to 0.79x of the class median nationwide, yet the central half stretches from $150,000 all the way to $2.4 million. That spread covers an equipment loan for an existing wash and a ground-up tunnel in one table. Florida is 3 among states for the program, but car washes are 14 of 39 inside the state. Franchise loans are 4.3%.

One lender with a very large book

Paradise Bank holds 50 loans worth $110.4 million, a book that sets the top end of the range. TD Bank, National Association holds 19 loans for $6.1 million, Wells Fargo Bank National Association 14 for $4.9 million, Readycap Lending, LLC 7 for $5.6 million, and Celtic Bank Corporation 6 for $13.5 million. SBA gives each loan's present holder, so the list is about books. Palm Beach County has 34 loans, Broward 20, Miami-Dade 18, Hillsborough 15 and Orange 14.

Floors and the code

For approvals made from FY2017 through FY2024, cancellation ran at 11.2% minimum, 12.4% with undisbursed loans counted. Of the 96 loans in the FY2017 to FY2021 cohort, 6.3% are charged off to date and 3.1% inside five years. The industry code puts car washes, truck washes and mobile washes together, and a truck wash has its own code that the cell cannot isolate.

The cycle

FY2021 was the peak with 35 loans and $66.1 million; FY2023 was the trough at 15 loans, and FY2026 recorded 17 loans and $32.6 million.

Testing a Florida car wash

A study should say which kind of wash it is. For a tunnel, test vehicle counts on the road, memberships against pay-per-wash revenue, water and drainage permitting, and competition within a few minutes' drive. For an acquisition, test the seller's actual receipts and the equipment's age. Because Florida loans reach well above the median, the project cost should be itemised into land, building and equipment, with coverage shown after a wet season and any rise in utility cost. An appraiser should be asked for land, building and operation separately.