SBA 7(a) Restaurant Feasibility Study in Florida

Where Florida's table-service restaurants stand

Florida holds fourth place nationally for SBA 7(a) full-service restaurant loans by count, and the class is first of 39 among Florida's asset classes, which makes restaurants the leading use of the program in the state. Across FY2017 to FY2026 SBA approved 1,600 such loans worth $1.13 billion in gross dollars. What separates this program cell from its parents is size: a median of $354,250 is 1.44x the median 7(a) full-service restaurant loan nationwide, and the central half of loans spans $148,375 to $928,700. Franchise units account for 13.9% of approvals.

The lender field

No lender here dominates by dollars. The Huntington National Bank holds 134 loans worth $66.3 million, and Newtek Bank, National Association holds 128 worth $57.8 million. TD Bank, National Association holds 95 worth $16.3 million, Truist Bank 62 worth $75.0 million, and Northeast Bank 58 worth $9.5 million. Truist writes fewer, far larger loans; TD and Northeast write many small ones. All of this is SBA's record of who holds, or held, each loan today, and it tells a reader nothing about how a bank decides. Miami-Dade leads the counties with 167 loans, then Hillsborough with 140, Orange with 126 and Broward with 119. Approvals bottomed at 75 in FY2020 and climbed to 232 by FY2025.

After approval

Cancellation touched at least 13.9% of the FY2017 to FY2024 approvals, rising to 14.4% if loans awaiting disbursement are counted as cancelled. A cohort of 556 loans funded by FY2021 shows 8.3% charged off so far, and 5.0% were charged off by the fifth year after approval. These are minimums, since loans still open can yet go wrong.

What a Florida study of this loan has to test

SBA 7(a) is a broad guarantee, usable for working capital, equipment, a purchase or improvements, so the first job is to name which of those the borrower needs. The study should then estimate covers per day the site can produce, rent against sales, and the other table-service concepts within the trade area, which in this state are numerous. Build-out and kitchen equipment should be priced against a ticket that tends to run above the national norm. Coverage of the payment should be tried on cautious sales with a slow first year, since the cancellation floor shows many plans never reach funding. The appraiser values a restaurant on earnings, so forecast and valuation must tell the same story.