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

Michigan stands at rank 7 among states for 7(a) limited-service restaurant loans, and the class takes second place among its asset classes, 2 of 39. The program approved 752 loans totalling $313.7 million from FY2017 to FY2026. More than half the borrowers, 55.5%, use a franchise. The $250,000 median equals 0.84x the 7(a) national yardstick, and $51,500 to $443,125 holds the inner half of notes, so Michigan quick-service borrowers take somewhat smaller notes than the national pattern yet larger ones than full-service owners in the same state.

Lenders and counties

Leading the holders, The Huntington National Bank has 282 loans worth $50.6 million, while Oxford Bank, with only 47 loans, carries $23.0 million, a high figure per loan. Fifth Third Bank holds 29 for $15.6 million, KeyBank National Association 21 for $8.2 million, and ChoiceOne Bank 20 for $8.6 million. SBA reports the current holder, which says nothing about underwriting. OAKLAND County has 153 loans, WAYNE 130, KENT 60 and MACOMB 58, with WASHTENAW at 31, GENESEE 29, BERRIEN 21 and INGHAM 19. Metropolitan Detroit supplies most of the lending.

Years and outcomes

The count dipped to 56 loans in FY2020, then reached 90 loans and $44.8 million in FY2021 and 93 loans and $42.8 million in FY2025. Cancellation hit 14.5% or more of the approvals from FY2017 to FY2024 and 16.4% with undisbursed loans included, a higher floor than many comparable cells. Across the 304 loans disbursed in FY2017 to FY2021, 4.3% at the least are charged off now, and 2.6% fell inside five years.

Questions the study has to settle

The study should open with the trade area: households, daytime workers, traffic patterns, and rival brands nearby, in a market where winter depresses walk-in sales. A franchised unit needs the brand's fees and mandated investments weighed against projected sales; an independent unit needs proof that the concept wins repeat customers. The cancellation floor hints that many approved projects never reach disbursement, so the study should confirm site control, permits and equipment lead times before a loan is sought. Debt service coverage should be shown on sales below plan, and the appraisal should treat the property as a general restaurant site. Program rules are SBA's, and none appear here.