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

Smaller checks, heavy franchising

Pennsylvania quick-service operators borrow less than counterparts elsewhere, and loan size is the one measure that differs from both the commonwealth's all-class lending and the class nationwide. A $200,000 median under 7(a) works out to 0.67x the typical limited-service restaurant loan across the country; the central half of loans spans $50,000 to $460,750. Over FY2017 to FY2026 the files record 736 loans totalling $251.5 million gross. Pennsylvania ranks 8 nationally for the program and class, and limited-service restaurants hold the number 2 spot among 39 asset classes in the state itself. Franchise brands account for 39.7% of loans.

Holders and counties in Pennsylvania

The Huntington National Bank is the largest holder in the table, with 107 loans and $24.7 million. Manufacturers and Traders Trust Company is next, 59 loans and $8.3 million, TD Bank, National Association has 55 for $3.8 million, Wilmington Savings Fund Society FSB has 38 for $18.0 million and Northwest Bank has 36 for $6.1 million. These come from the holder field SBA reports, and they say nothing about how any bank treats a particular application. Allegheny County leads on count with 100 loans, ahead of Philadelphia with 91, Montgomery with 68, Bucks with 62, Delaware with 39, Chester and Lancaster with 38 each, and Butler, Cumberland and Erie with 21 each. Allegheny and Philadelphia counties sit close together on count.

Approvals, cancellations and losses

Annual approvals dipped to 49 in FY2020 and climbed to 90 in FY2023. Cancellations run at least 14.3% for the FY2017 to FY2024 group and could reach 17.1% should every loan not yet disbursed be counted as cancelled. The 287 loans funded in FY2017 to FY2021 show 8.0% charged off today and 4.2% within five years. Both numbers are floors; open loans may still fail. None of these rates is flagged for Pennsylvania.

What a Pennsylvania quick-service study has to test

With a median near $200,000 and so many franchised units, the first test is the unit itself: sales volume the concept achieves at comparable sites, the royalty and advertising obligations that come out of those sales, and the territory terms the franchisor grants. Site work follows. Count traffic past the door, drive-through capacity, the visibility of the building and the competing quick-service brands in the same corridor. Build-out, equipment and opening inventory should be itemised, and debt service coverage must hold on a slower first year and after a rise in labor cost. The lease deserves to be in the package, since an appraiser will treat most of the value as the business.