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

Smaller loans than the Texas picture

Quick service in New York is the second-largest asset class in the state, at 2 of 39, and New York stands fourth among states for the 7(a) loans in this class. SBA's file holds 1,051 approvals from FY2017 to FY2026, worth $359.0 million. The dollars are modest for a class ranked second in the state because a New York unit is financed for far less than a drive-through elsewhere. The median is $140,000, only 0.47x the nationwide 7(a) figure for counter-service units, with the central loans spanning $50,000 to $362,000.

An independent-heavy market

Franchised units account for 22.1% of the loans, a real minority but nowhere near the franchise dominance seen elsewhere. The small tickets are consistent with counter-service concepts that rent a small storefront, buy used equipment and run with few staff. The cell therefore reflects delis, bakeries, pizza counters and similar independents as much as branded drive-through stores, though the industry code does not itself distinguish them.

Lenders and counties

Manufacturers and Traders Trust Company shows 198 loans, TD Bank, National Association 126, KeyBank National Association 44, JPMorgan Chase Bank, National Association 38 and NewBank 34. The names are SBA's current holders, so the tallies measure holdings and say nothing of policy. New York County has 194 loans, Kings 104, Suffolk 85, Erie 84 and Queens 83, so the activity reaches upstate and Long Island as much as the five boroughs. Approvals fell to 62 in FY2020, then climbed to 160 loans and $55.8 million in FY2025.

Cancellations and charge-offs

Cancellation ran at 13.8% or more for approvals dated FY2017 to FY2024, or 14.8% when loans yet to be disbursed are counted. In the disbursed FY2017 to FY2021 cohort of 436 loans, 7.6% are charged off to date and 5.5% were charged off within five years. These are floors, as loans still open can move higher, and they are the figures a lender should weigh against the small loan size when judging how much margin a typical file leaves.

What a New York study has to test

A study here has to establish that the site's foot traffic, not the borough's reputation, supports sales: pedestrian counts, daytime workers, transit proximity and the other counters within a short walk. Occupancy cost is the pressure point in New York, so the lease, its escalations and any personal obligations under it need a candid treatment next to a loan that will probably be near $140,000. The model should show payroll, food cost and debt service together across a sluggish first year, and the appraisal will rest on the going concern's earnings.