SBA 7(a) Restaurant Feasibility Study in Louisiana

Louisiana puts full-service restaurants at the top of its asset classes, 1 of 39, though the state ranks 33 among states on 7(a) volume for the class. FY2017 to FY2026 saw 218 approvals worth $123.5 million. The $289,650 median is 1.18x the 7(a) full-service median nationwide, and $150,000 to $585,800 spans the middle half. Franchises appear on 12.4% of loans. By parish, Orleans has 56 loans, Saint Tammany 36, East Baton Rouge 28, Jefferson 24 and Lafayette 14.

Holders

American Bank holds 26 loans worth $21.9 million, a high average, while Fidelity Bank has 19 worth $5.7 million, Hancock Whitney Bank 18 worth $7.5 million, and Newtek Bank, National Association and JPMorgan Chase Bank, National Association 13 each, worth $6.4 million and $5.9 million. These are SBA records of loans each institution holds or held, and imply nothing about how any institution lends. A reader should take them as a list of where the paper sits today, which is useful for knowing who services an existing loan but not for predicting who would finance a new one.

Outcomes

Of 86 loans disbursed in FY2017 to FY2021, 9.3% at the least are charged off, and 5.8% within five years. Of Louisiana approvals dated FY2017 to FY2024, 13.5% or more were cancelled, and 14.7% on the wider count. Approvals peaked at 33 loans in FY2024 and again in FY2025, with $21.3 million and $18.4 million, and sank to 14 in FY2017 and FY2019. FY2026, a complete fiscal year, has 15.

What a Louisiana restaurant study must test

A study should split the expected trade by customer source and show which the concept depends on. It needs to examine insurance cost and the chance of a closure, because an interruption to revenue strains debt service. The study should test competition, labor, and the lease against projected sales, and itemize build-out and equipment, comparing the total with a $289,650 median. With floors at these levels, the loan payment should be shown surviving a soft opening and a lost month. Pledged real estate needs its own appraisal. Louisiana borrowers should read program rules at SBA. The study should also state the opening date it assumes and the months of working capital that carry the restaurant to that date. A closing sensitivity table, with sales down in steps, would show lenders where the payment stops being covered.