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

No state sends more limited-service restaurant loans through the 7(a) program than California, which holds rank 1 by loan count; the class is also second inside California's own book, 2 of 39. The cell totals 2,569 approvals and $1.19 billion for FY2017 to FY2026. Because this page looks at 7(a) alone, no 504 real estate loans blur the picture. The median note, $300,000, comes to 1.01x the national 7(a) mark, so size is ordinary and volume is the story; $150,000 to $536,100 covers the middle half, and 40.2% of all loans carry a franchise flag.

Holders, counties and the rhythm of approvals

Holder names come from SBA. Bank of Hope tops the list with 195 loans and $64.0 million; U.S. Bank, National Association follows at 171 and $39.3 million, then The Huntington National Bank at 120 and $35.2 million, CDC Small Business Finance Corp. at 75 and $14.4 million, and Northeast Bank at 74 and $12.4 million. Each figure is a record of loans an institution holds or held, and implies nothing about how it lends. LOS ANGELES County alone has 708 loans, with ORANGE at 298, SAN DIEGO 217 and RIVERSIDE 149. Yearly counts peaked at 369 in FY2018, sank to 169 in FY2020, and climbed back to 327 loans and $150.4 million by FY2025.

Cancellations and charge-offs

Among approvals dated FY2017 to FY2024, cancellation reached 12.8% at the least, and 13.2% when undisbursed loans are scored as cancelled too. Out of 1,144 loans in the disbursed FY2017 to FY2021 cohort, 8.9% have already been charged off at a minimum, and 5.2% went within five years. Open loans can still sour, so these numbers are lower bounds. A California operator should treat them as a reason to build a downside case, not as an expected outcome.

What a California study under this program has to test

A study for a limited-service restaurant seeking 7(a) money must show the particular site can carry the debt. That starts with traffic counts, visibility, a workable drive-through and the strength of the brand if one is involved, then compares sales per square foot with occupancy cost, which in California can be heavy. Labor is the largest operating expense and wage rules shift it, so the study needs a labor model. Debt service coverage should survive a sales shortfall, because the charge-off figures show some borrowers never complete repayment. Program eligibility and limits are SBA's to state; this page repeats none of them. Where real estate or equipment is pledged, an appraisal must support the collateral without leaning on the restaurant's projected sales.