SBA 7(a) Quick Service Restaurant Feasibility Study in New Jersey

Small tickets and high cancellations

In New Jersey, limited-service restaurants borrow modestly under SBA 7(a) and cancel often. The median loan is $215,000, just 0.72x the national 7(a) median for limited-service restaurants, and cancellations reached at least 17.1% of FY2017 to FY2024 approvals, or 17.9% when undisbursed loans are counted. These two figures are what distinguish this cell from its parents. The program approved 655 loans across FY2017 to FY2026 for $242.2 million in gross dollars, and the middle band of loans reaches from $50,000 to $487,500.

A franchise-heavy book led by one bank

New Jersey is eleventh among states for the program, and limited-service restaurants hold second place of 39 among the state's classes. Franchise units stand behind 34.4% of loans. TD Bank, National Association holds 119 loans worth $11.6 million, a very small amount per loan. Manufacturers and Traders Trust Company holds 44 worth $4.8 million, Northeast Bank 33 worth $2.6 million, The Huntington National Bank 32 worth $8.0 million, and Provident Bank 25 worth $16.7 million. Each row is SBA's record of what a bank holds or held, and the page passes no judgement on any lender. Bergen County has 110 loans, Middlesex 87, Hudson 57, and Essex, Monmouth and Union 41 each. Volume dropped to 32 in FY2020 and reached 81 in FY2025.

Losses

Of the 243 loans that funded from FY2017 to FY2021, 7.0% are charged off to date and 2.9% was written off within the first five years. Both are floors. The gap between them suggests losses keep arriving after the fifth year, so a borrower should plan for a long horizon, not a quick payback.

Testing a New Jersey quick-service plan

The guarantee serves general business purposes, so the study has to specify the use of funds. At tickets this low, most borrowers are buying a franchise unit or converting existing space, and the study should compare the franchisor's disclosed costs with local rent, which in dense counties can take a large share of sales. Traffic and parking at the site, the density of competing brands and the cost of labour all need testing. Run payment coverage on the low side of the franchisor's reported unit sales. A lender will look for reasons a plan might be one of the cancelled ones, so the study should settle the lease and permit questions that sink deals before closing.