SBA 7(a) Restaurant Feasibility Study in Delaware

Delaware's full-service restaurants: the leading class, with small loans

Delaware lists full-service restaurants at 1 of 39 among its financed asset classes, though the state's rank among states by loan count for the pairing is 46. From FY2017 to FY2026 the agency approved 83 such loans under 7(a), for $33.5 million. A median of $150,000 lands at 0.61x the nationwide ratio, a smaller loan than most borrowers in this class take elsewhere, and the interquartile range runs from $50,000 to $575,250. Franchises appear on 6.0% of loans. By our margin test the cell does not differ from its parents on any measure.

Three counties, four prominent holders

New Castle County has 43 loans, Sussex 27 and Kent 13. The largest holder SBA lists is Manufacturers and Traders Trust Company, at 29 loans and $4.5 million. Wilmington Savings Fund Society FSB holds 14 loans worth $10.5 million, a far higher average, and TD Bank, National Association 10 worth $487,000, while True Access Capital Corporation, with 6, holds $1.2 million. Annual volume was thin in FY2021 and FY2022, with 2 loans each year, then recovered to 14 loans and $6.9 million in FY2024 and 12 loans and $9.8 million in FY2025.

Dining approvals in Delaware for FY2017 to FY2024 lost at least 10.8% to cancellation, and the ceiling is the same. Among the 33 funded loans, 6.1% is the write-off floor so far, while 3.0% came by year five. That cohort is small, so one loan changes the percentage a great deal. A lender should take the floors as a signal that restaurant loans can fail, and not as a precise rate.

Testing a Delaware dining request

A study for a full-service restaurant should test concept and location together: seating and turns, average check, the demographic served, the competitors in the immediate area, and whether the site draws weekday and weekend trade. It should build a labour and food cost model, since margins in sit-down dining are thin, and show payments covered when sales fall below plan. The sponsor's experience matters as much as the numbers, and the study should present it. With loans commonly small in this cell, a lender will want to see that the budget covers working capital as well as the build-out, and that the lease runs beyond the loan.