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

Franchised, mid-sized and quick

Indiana ranks fourteenth for limited-service restaurant loans under the program, and the class is the state's second of 39. The program approved 489 loans from FY2017 to FY2026 worth $192.1 million in gross dollars, and 58.1% of them carry a franchise flag. At $260,000 the median is 0.88x the class median nationwide, and a band from $90,000 to $465,000 holds half of the loans, so this is a small-ticket cell in which the franchise fee and a modest fit-out are the usual purchases.

Banks and counties

With 84 loans worth $22.1 million, The Huntington National Bank leads Indiana's table by a wide margin. Centier Bank holds 39 worth $6.9 million, Merchants Bank of Indiana 16 worth $7.5 million and Horizon Bank 14 worth $4.1 million. These are the holders SBA records today, which is not a statement of how any bank lends. Marion County has 63 loans, Hamilton 57 and Lake 53, followed by Allen with 34 and Porter with 31. The yearly count ranged from 36 in FY2018 and FY2026 to 67 in FY2021.

After approval

Cancellation reached at least 10.4% of FY2017 to FY2024 approvals, or 11.7% with undisbursed loans treated as cancelled. In the funded cohort of 223 loans, 5.4% are charged off so far and 3.1% inside the first five years, with open loans free to add to either floor.

Testing an Indiana quick-service project

A study should name the use of funds under 7(a): franchise fee, build-out, equipment or buying an existing unit. Because a franchisor sets many costs, the study should read the disclosure document for required remodels, royalties and advertising contributions, and set them against the reported sales of comparable Indiana units. Site tests include traffic count, drive-through stacking, visibility from the arterial, and the number of competing brands within a short drive. The market is spread across a large suburban base around Indianapolis and the northwest, so the trade-area definition deserves care. Show loan payment coverage on the low end of reported sales, with a second case in which the nearest competitor adds a drive-through lane, and describe plainly what happens to the franchise relationship if the unit misses its targets. An appraiser will value the store on cash flow after fees.