SBA 7(a) Quick Service Restaurant Feasibility Study in South Carolina

Franchise-led, with a loss floor to respect

South Carolina's limited-service restaurants are financed through SBA 7(a) mainly as franchised units: 64.3% of the 238 loans approved across FY2017 to FY2026 carry the flag, and together they reach $128.1 million in gross dollars. The state is 25th among states for the program by loan count, while the class holds third place of 39 in South Carolina's own asset classes. Median borrowing of $344,800 stands at 1.16x the median for limited-service restaurants nationwide, and loans between $171,250 and $625,000 account for the middle of the book.

How the funded loans have done

Of the 82 loans funded by FY2021, 7.3% are charged off to date, and 6.1% had been charged off by the fifth anniversary of approval. The measures sit close together, so most of that cohort's trouble arrived early. The cancelled share is 11.2% at the least among approvals made up to FY2024,; including undisbursed loans leaves the ceiling at 11.2%. Loans still open can fail, so every figure here is a minimum.

Who holds the paper

Stearns Bank National Association holds 23 loans worth $4.9 million, a hair behind The Huntington National Bank with 24 worth $6.4 million. Pinnacle Bank holds 18 worth $16.5 million, a much larger amount per loan, TD Bank, National Association 16 worth $2.8 million, and United Community Bank 13 worth $12.4 million. A holder table says who has the paper now and nothing about how the loan was underwritten. Greenville County has 37 loans, Charleston 27, Richland and York 22 each, and Horry 17. Yearly approvals peaked at 43 in FY2025 after a low of 10 in FY2020.

Questions a South Carolina study must settle

A study starts by naming what the money buys, whether a franchise fee, fit-out, kitchen equipment or a unit already trading. Because most borrowers here are franchisees, the franchise disclosure and the agreement's remodel and royalty terms set part of the break-even. Counting vehicles on the road, lanes in the drive-through, rival brands within reach and the unit sales a franchisor discloses for similar stores is the next job; the loan payment should then be tried against the weaker end of those disclosures. Coastal and inland sites differ in seasonality, so monthly sales should be modelled rather than annualised. Any appraisal will start from cash flow after royalties, so the study has to reproduce that figure.