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

Credit unions lead a franchise-heavy cell

Utah quick-service restaurants borrowing under SBA 7(a) are financed largely by credit unions: Mountain America FCU holds 31 loans worth $9.5 million, and America First Federal Credit Union holds 26 worth $12.9 million. Of the 259 loans approved from FY2017 to FY2026, 49.4% carry a franchise flag. They total $126.2 million in gross dollars. Utah ranks 23rd for the program by loan count, and within Utah the limited-service class stands second of 39. The median loan of $334,900 is 1.13x the national median, and half the loans lie between $150,000 and $564,000.

Other holders and places

Central Bank holds 24 loans worth $6.4 million, and Zions Bancorporation, National Association 18 worth $6.7 million. Credit unions hold the two largest positions by count, and the pair outweighs every bank in the list. The figures are SBA's account of present holders and do not describe how any institution lends, but a franchisee choosing between a credit union and a bank should know that both are active here. Salt Lake County has 97 loans, Utah County 52, Davis and Weber 19 each, and Washington County 15. Approvals fell to 12 in FY2020 and recovered to 40 in FY2026.

Early cancellations and later losses

Utah cancellations reach 13.1% at the least for approvals through FY2024, and adding undisbursed loans leaves it at 13.1%. The funded cohort of 101 loans shows 5.9% charged off so far and 5.0% by the fifth year. Treat these as minimums while loans stay open, and note that the second set of figures is close to the first.

Testing a Utah franchise unit

Funds under this guarantee could pay a franchise fee, a build-out, equipment or an existing unit, and the study should pin down which. Read the franchise agreement closely, since territory, remodel timetables and royalties all move the break-even. Check traffic and drive-through capacity at the pad, the brands already present in the Salt Lake and Utah County markets where most loans sit, and whatever unit sales the franchisor reports for comparable stores. Measure the loan payment against the weakest comparable store, since the charge-off floors show losses arrive early. A lender's appraisal will look at the unit's cash flow once royalties are paid, not at gross sales.