SBA 7(a) Car Wash Feasibility Study in Michigan

Small loans, many of them very small

Michigan car wash loans under SBA 7(a) are modest. The median of $317,300 is only 0.40x the national 7(a) figure for car washes, the sharpest gap of any metric on this page, and the middle half starts as low as $50,000 and reaches $774,150. Across FY2017 to FY2026 the state posted 132 approvals worth $102.8 million. Michigan ranks 6 among states for the program's car wash loans by count, while the class is 13 of 39 inside the state. Franchise ties barely register at 3.0%.

The Huntington National Bank holds 45 of these loans, worth $7.7 million, so its average is small, while Celtic Bank Corporation holds 16 worth $27.4 million, an average several times larger. Old National Bank holds 5 worth $12.5 million and Southern Michigan Bank & Trust holds 5 worth $2.6 million. This describes holdings in SBA's records and passes no verdict on how either lender approaches a car wash. Macomb County leads with 29 loans, Wayne has 20, Oakland 18, Ingham 8 and Ottawa 6. Approvals peaked at 21 in FY2021, when dollars reached $27.8 million.

What the car wash code covers

One code spans car washes, truck washes and mobile washes alike. A tunnel wash on a major road, a self-serve bay and a mobile operator are very different businesses with very different costs, and the blended counts cannot tell them apart. A study should name the format.

For Michigan car wash loans approved through FY2024, the cancellation floor is 12.3%, rising to 14.0% when undisbursed loans are counted. Withof 58 loans, charge-offs run at 1.7% or more to date, the same 1.7% as within five years of approval. Minimums, not final outcomes.

Underwriting tests for a Michigan wash

Weather comes first in Michigan: winter salt drives demand for washing, but freezing weather limits operation and strains equipment. A study should model monthly volume across the year, not an annual average. Vehicle counts on the frontage, sight lines, turning access, rival washes along the same corridor, and the price for an average wash determine revenue. Equipment, water reclamation and utilities make up much of the cost, and the property may be hard to reuse, so the appraisal matters. Show coverage of the debt payment in a mild winter and in a harsh one.