SBA 7(a) Quick Service Restaurant Feasibility Study in Arkansas

The cancellation floor that stands out

Arkansas limited-service restaurants account for 91 SBA 7(a) loans and $43.3 million gross. Arkansas is 39th among states for the pairing, though the class takes second place, 2 of 39, at home. What distinguishes the cell is cancellation: a floor of 20.5% of approvals never funded after approval, and the ceiling matches. That cleared our margin against Arkansas lending generally and the class nationally. A loan that never funds is not a loss, but a rate this high says many restaurant plans collapse before closing, often at the lease, site or franchise stage.

A median of $339,500 is 1.14x the national median; the typical spread runs $134,000 to $507,500. Franchise brands appear on 60.4% of loans. ACC Capital holds 9 loans, The Huntington National Bank 7 and Bank OZK 6. Stearns Bank and Arvest Bank have 5 each. The table shows who holds the paper, which says little about how anyone lends. Benton County has 18 loans, Pulaski 16, Washington 9 and Faulkner 7, so northwest Arkansas and the Little Rock area carry the class.

The loss record

Charge-offs in the funded cohort of 39 loans reach at least 7.7% to date, with 5.1% occurring inside five years. Loans still open can fail, so both are minimums. They did not clear our distinctness margin on their own, but added to the cancellation floor they point to a class in which plans fail more often than average at either end. Volume was lumpy: 14 loans and $13.1 million in FY2021, then 8 in FY2022, 12 in FY2023 and only 4 loans and $2.0 million in FY2024.

What an Arkansas quick-service study must prove

A study has to explain why this project will close and then perform. That means a signed or credible site, a franchise agreement with its fees and remodel obligations if a brand is involved, and tested traffic and visibility. Sales belong on a ramp, set against food, labor and occupancy costs, with a lower-sales case to test debt service coverage. Equipment and build-out should be set against a ticket above the national median. The appraiser will want documented earnings for an existing unit. If the plan relies on a franchise approval or a lease that is not yet signed, the study should say so plainly and date the milestones.