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

Virginia quick-service restaurants: franchise country

Limited-service restaurants rank second among Virginia's classes, and the state sits 17 among states under 7(a), with 407 approvals from FY2017 to FY2026 and $182.0 million in gross dollars. The cell is dominated by franchising: 59.5% of loans go to franchised units, so the file often turns on a franchisor's system, fees and territory. The median loan of $296,000 matches the nationwide figure at 1.00x, and half the loans fall between $125,000 and $500,000, a typical build-out and equipment range for a drive-through or counter-service unit.

Who holds Virginia's quick-service loans

The Huntington National Bank has 38 loans with $11.1 million, narrowly with Manufacturers and Traders Trust Company close behind at 36 loans and $5.1 million. Then come Newtek Bank, National Association with 17 loans and $3.8 million, Stearns Bank National Association with 15 and $4.7 million, and Truist Bank with 15 and $4.3 million. These are SBA's listings of present or former holders, and they imply nothing about what a lender demands. Fairfax County has 92 loans, Loudoun 35, Prince William and Virginia Beach city 29 each, Arlington 24, Alexandria city 16, Richmond city 15, and Chesapeake city, Chesterfield and Henrico 12 each.

Outcome floors that run high

Charge-offs are the sharper concern. Across 156 early-cohort loans the charge-off floor is 9.6% so far and 5.8% inside five years. Cancellation takes at least 14.0% of approvals made through FY2024, or 15.3% if the undisbursed are counted. Each is a minimum, since loans remain open.

Testing a Virginia quick-service unit

Traffic and site decide this business. A study should evaluate the counts on the adjoining road, the access, the drive-through stacking capacity, and other brands competing for the same drivers. It should check the franchisor's required investment against the available budget, the sales volume needed to cover royalties, rent and labor, and the working capital to open. Compare the build-out with a ticket near $296,000, then run coverage with sales at a lower level in the first year. A private bank makes the loan under 7(a) with SBA guaranteeing part of it, so the valuation looks at the business and any pledged property separately.

Fairfax County is far ahead of every other county, so a unit in a county with few listed loans will rest on thin local evidence and should say which comparable market it borrows from.