SBA 7(a) Parking Garage Feasibility Study

Parking: few loans, a high cancellation floor

Parking garages and lots took 118 SBA 7(a) loans and $68.0 million from FY2017 to FY2026. The median is $250,000, with half the loans between $51,275 and $717,250, small sizes that point to operators, equipment and lot improvements more than structured garages. Cancellation is the striking figure: at least 20.5% of the FY2017 to FY2024 parking approvals were cancelled, perhaps 21.6%, high for 7(a), though not far enough above parking lending as a whole, which 7(a) dominates, to pass our distinctness margin.

The code needs a caveat: truck parking shares it with car parking and cannot be separated, so a truck yard and a downtown garage can sit side by side in this record. Enterprise Bank & Trust leads the lenders with 12 loans and $8.0 million; TD Bank, National Association has 10 loans for only $379,400 and Readycap Lending, LLC 6 for $1.0 million. California has 25 loans, Texas 13, New York 10, Florida 9 and Georgia 8. Annual counts have stayed between 6 and 16. Franchise share is 0.85%.

Late losses on a small cohort

The 37 parking loans that funded between FY2017 and FY2021 show a charge-off floor of 2.7%, with none, 0.00%, inside five years; each loss on record arrived later in the term. With a cohort that small, one default moves the rate, and a lender should weigh the cancellation floor more heavily than the loss figure.

What a parking study must test

The study has to say first whether this is car parking or truck parking, because the demand drivers differ entirely. A feasibility study for a 7(a) parking loan then has to test demand from the uses around the site, event calendars and the contracts with monthly parkers; the cost of paving, lighting, gates and payment systems; debt service coverage from transient and monthly revenue, with a case for losing the main demand source nearby; and the appraisal, which for a surface lot often rests on land value and for a garage on income, since a parking structure has little alternative use. A borrower should also expect the lender to ask who else could operate the site if this business fails.