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

Losses that set Iowa apart

Iowa limited-service restaurants hold 137 SBA 7(a) loans, $63.4 million approved over those ten years. The state ranks only 36th for the pairing, yet the class is second in Iowa's own list, 2 of 39, so the program is a core financing route for fast food and counter service here. The standout metric is losses. Iowa's funded cohort holds 75 loans from FY2017 into FY2021, and at least 14.7% are charged off to date, and 8.0% were written off within five years. Loans not yet closed out may add to both, and both passed our margin against Iowa overall and the class nationally.

A median of $272,500 is 0.92x the national figure; the central half spans $120,700 to $500,000. Franchised units are 57.7% of loans, so a majority have a brand behind them, and the loss floor is high regardless. A franchise agreement supplies a system, not a sales history for one site. Lenders are dispersed: Wells Fargo Bank National Association holds 8 loans, Northwest Bank and Farmers State Bank 7 each, and Lincoln Savings Bank with Cedar Rapids Bank and Trust Company 6 each. Holder counts from SBA, not lending standards.

Where and when

Polk County, home to Des Moines, accounts for 40 loans, ahead of Scott with 12, Black Hawk and Linn with 11 each and Johnson with 8. Dallas and Woodbury show 6 apiece. Approvals peaked at 22 loans in FY2018 and fell to 5 loans and $4.1 million in FY2026, the lowest year of the span. Cancellation reached a floor of 10.0% for FY2017 to FY2024 approvals, with a ceiling the same. A small-city operator should weigh that against how few strong sites exist outside the metros.

What an Iowa quick-service study must prove

Site is everything: traffic counts, drive-through capacity and the pull of nearby anchors, since a brand name cannot replace local volume. The model should build food cost, labor and any royalty or advertising fee, then sales on a ramp with a slower case, because the early-years loss floor above is this cell's clearest warning. Equipment and build-out should be compared with a ticket near the national median. The appraiser will rest on earnings the store can demonstrate.