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

Second among South Dakota classes, last among its peers nationally

Limited-service restaurants stand at 2 of 39 among South Dakota's SBA 7(a) asset classes, yet the state is 47 among states by number of loans for the class. Both numbers are true at once: the state is small, and fast food and counter-service operators absorb a large share of its lending. The tally for FY2017 through FY2026 is 52 loans and $29.1 million in gross dollars. A median of $308,800 sits 1.04x above the national level, with typical loans bracketed by $150,000 and $612,000. Franchise affiliation is common, at 59.6% of loans, which sets this class apart from the sit-down restaurant page for the same state.

Sioux Falls and Rapid City dominate

Minnehaha County has 22 loans and Pennington 10, with Brookings at 8, so the counties around Sioux Falls, Rapid City and Brookings account for most of the activity. Clay, Davison, Fall River and Lawrence follow with 2 each, and Custer, Lincoln and Meade with 1 each. Only one lender appears in the program list: The First National Bank in Sioux Falls, with 7 loans and $6.0 million as SBA records its present holdings. That says where these loans sit now and nothing about lending standards. Volume shifted late: 9 loans and $8.2 million in FY2025, the largest recent year, followed by 7 loans and $4.3 million in FY2026.

Cancellation and what is withheld

Cancellation after approval has a floor of 5.6% through FY2024, rising to 8.3% in the ceiling case that adds loans never disbursed. That is low next to several other classes on this site. A charge-off rate does not appear, because the older South Dakota loans are too few to print one, and the absence must not be read as a zero. In the early years the class ran at 3 loans a year in FY2018, FY2019 and FY2020, with FY2020 at only $485,000, before building to the late peak.

What a South Dakota counter-service study must test

A quick-service concept lives or dies on traffic, so the study begins with counts: vehicles passing the site, daytime population, the draw of nearby employers and campuses, and competing drive-throughs. Because most of these loans carry a franchise flag, the study should apply the brand's published unit economics only as a benchmark and then test them against local wages, rent and sales. Seasonality in a northern climate matters, and a winter case should be shown. A loan this size is often for build-out and equipment, so project cost should be set against the sales needed to carry the payment. If the site is owned, an appraiser will want to know how the building would be reused should the franchise end.