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

The smallest median loan in the group, and one lender

Quick-service restaurants financed through SBA 7(a) in Hawaii borrow strikingly little. The median loan is $50,000, a mere 0.17x the national figure for this restaurant type, and the larger end of the middle band reaches only $300,000, from a floor of $40,000. SBA recorded 78 loans worth $21.1 million. Hawaii is 42nd among states for loan count, while the class takes second place of 39 inside the state. Franchise-affiliated borrowers account for 24.4% of loans.

Central Pacific Bank is the only named holder in SBA's files for this cell, with 44 loans worth $2.6 million. That makes the record unusually dependent on a single institution, which describes the holdings and nothing about the bank's standards. Honolulu County has 55 loans, Maui 12, Hawaii County 9 and Kauai 2, so the island of Oahu accounts for most of what a study could compare against.

Losses stand out

Charge-offs are the cell's second distinguishing feature. Among the 34 loans in Hawaii's early cohort, 8.8% or more have been charged off to date, and 2.9% within five years of approval. Hawaii's cancellation floor on approvals through FY2024 is 14.5%, climbing to 16.1% when undisbursed loans are counted. All four rates are minimums.

Approvals were 10 in FY2017 and 13 in FY2018, then ran between 5 and 7 until FY2023, when 10 loans carried $6.5 million, the largest dollar total of the series. FY2026 shows 6 loans worth $865,000.

What a Hawaii quick-service study must test

With a median ticket of $50,000, many of these loans finance small counter-service units, kiosks or conversions, where the leasehold and a few pieces of equipment are most of the cost. The study should therefore test the lease first: term, rent against sales, and the landlord's consent to the use. Sales must rest on foot traffic or local residents rather than a visitor count that cannot be verified, and the cost of imported food and supplies, labour and utilities should be built into margins. For a franchise, include fees and required equipment. With high charge-offs in the early cohort, the plan should carry the payment through a slow year and state what a lender could expect to recover from used equipment. A single-owner unit needs a plan for the owner's absence.