SBA 7(a) Restaurant Feasibility Study in Kentucky

Small loans, one dominant county, a visible loss floor

Kentucky restaurants with table service borrow modestly through SBA 7(a): a $169,500 median is just 0.69x the national figure. Across FY2017 to FY2026 SBA approved 205 loans for $76.8 million in gross dollars, and half of them fall from $50,000 to $500,000. Kentucky is 34th among states by count, though restaurants lead its own 39 classes. Franchise units make up 23.4% of loans, and Jefferson County has 71 of them, far ahead of Fayette with 22 and Kenton with 18.

What came after approval

The cancelled share of Kentucky approvals through FY2024 is 9.4%, and so is the ceiling. Of the 91 loans funded by FY2021, 7.7% are charged off today, against 4.4% at the five-year mark. That gap implies losses kept arriving after the fifth year, so a lender should see these loans as a long exposure. Both are floors.

Holders

The Huntington National Bank is first with 42 loans worth $10.3 million. Community Trust Bank, Inc. and Republic Bank & Trust Company have 21 loans each, worth $3.5 million and $10.5 million respectively. At 14 loans each, Stock Yards Bank & Trust Company has $8.7 million and U.S. Bank, National Association only $342,000. SBA lists who holds each loan now, which is not a statement of a bank's standards. Approvals ranged from 15 in FY2021 and FY2024 to 29 in FY2017.

Questions for a Kentucky kitchen

The study opens with the use of funds. At this scale many borrowers purchase a working restaurant or equip leased space, so the price belongs beside documented sales and the owner's tax returns. Seats and turns must be weighed against rent, kitchen and floor labour against the local pool, and rivals against a trade area that outside Louisville and Lexington may be a single town. Seasonal swings, local events and the lunch trade deserve separate lines. The loan payment should be tried on cautious covers per day with a slow first year, since a 7.7% charge-off floor shows how thin the margin can be. An appraiser will set earnings against the price paid.