SBA 7(a) Restaurant Feasibility Study in California

The deepest pool of 7(a) restaurant lending

No other state matches California for full-service restaurants under the 7(a) program. Over FY2017 to FY2026 the file records 3,776 loans totalling $2.09 billion, California ranks first among states by number of loans, and restaurants rank 1 of 39 among the classes financed inside the state. A borrower or lender here works with the largest set of comparable loans anywhere in the country, and this page covers the 7(a) program alone, which is the usual route for working capital, equipment, leasehold improvements and the purchase of an existing restaurant. The typical loan is $277,500, a ratio of 1.13x against loans of this kind nationally under the program, while the middle half runs from $120,000 to $661,750.

Brand share, counties and the pandemic dip

Only 7.6% of the loans went to franchised restaurants, which tells us the record belongs mostly to independent owners, many of them family operators. Los Angeles County alone accounts for 1,104 loans, Orange County for 432 and San Diego for 315, followed by Riverside with 224, Alameda with 182, Santa Clara with 181 and San Bernardino with 171. Yearly volume tells the pandemic story: 505 approvals in FY2017 fell to 285 in FY2020 and 202 in FY2021, then recovered to 461 in FY2025 and 401 in FY2026. A lender weighing a current request therefore has a deep and recent record to compare against.

Who holds the loans

Bank of Hope leads the lender table with 421 loans and $176.6 million. U.S. Bank, National Association follows with 320 loans and $59.2 million, JPMorgan Chase Bank, National Association with 137 loans and $42.5 million, Wells Fargo Bank National Association (124 loans, $41.0 million), and Hanmi Bank with 120 loans and $50.8 million. The table counts loans sitting on each institution's books now or earlier; it is a picture of portfolios, not a window into any lender's underwriting or demands.

Cancellation and failure

Cancellation starts at a floor of 13.1% for approvals made in FY2017 to FY2024, and reaches 13.4% when still-undisbursed loans are treated as cancelled. Losses tell more. Among 1,636 disbursed loans, 7.0% stand charged off so far, and 4.5% went bad inside the first five years after approval. Neither number is final, because open loans may still fail, but together they show that full-service restaurant credit in California carries real loss, not a token amount.

What a California restaurant study has to test

With thousands of rivals, a restaurant here has to prove why its location and concept earn a place: traffic and visibility, the daytime and evening population, parking, the local following for the cuisine and the rent that sales can carry. Labour is the largest controllable cost in California, so wages, scheduling and turnover need explicit assumptions, together with a food cost and a sales ramp that survive a slow first year. A request near the top of the middle half, about $661,750, should be reconciled with a realistic build-out, equipment and working capital. The lender will want repayment shown on a cautious sales case given the loss floors above, with the owner's equity and the lease term in view.