SBA 7(a) Restaurant Feasibility Study in New Jersey

New Jersey restaurants: big dollars, independent owners

New Jersey restaurant lending through 7(a) is notable for its dollars. Between FY2017 and FY2026 the state shows 1,138 full-service approvals worth $735.4 million, a volume that ranks 6 among states, and restaurants are first among the 39 classes in New Jersey. A median loan of $260,000 is 1.06x the national 7(a) benchmark, yet most mid-sized loans fall from $50,000 to $835,850, so tiny working capital loans sit beside large acquisitions. Franchising reaches only 5.9% of loans, which marks this as a market of independent operators.

Lenders and counties

TD Bank, National Association holds 180 loans worth $26.3 million. Behind it come Manufacturers and Traders Trust Company with 67 loans and $8.8 million, Fulton Bank, National Association with 61 loans at a hefty $76.4 million in total, and Wilmington Savings Fund Society FSB with 40 loans worth $39.2 million, while Santander Bank, National Association trails with 59 loans and $6.2 million. Dollars per loan diverge sharply among them, so a borrower should expect institutions in the state to serve very different ticket sizes. The holder column follows SBA's records, which name the institution that holds or held each loan. Bergen County has 240 loans, Essex 95, Middlesex 89, Monmouth 87, Camden 83, Hudson 73, Ocean and Union 62 each, Morris 51 and Cape May 44.

The outcome floors

Cancellations reach a floor of 15.2% among approvals through FY2024, and 16.3% when undisbursed loans count as cancelled. Of 468 loans that funded in FY2017 through FY2021, a floor of 7.1% is already charged off, and 3.0% went inside five years. Loans still open can raise each figure, and a New Jersey lender should read them beside the high rents and labor costs of the market.

The proof a New Jersey restaurant file needs

Rent and occupancy cost sit at the center. A study should test the sales per seat needed to carry the lease, the prime cost of food and labor, and the permits and build-out in the specific municipality. With tickets that range from small to large, it should state whether the loan funds a purchase, a renovation or a new concept, and compare the amount with a median near $260,000. Coverage of debt service should be run at sales below plan, and any real estate purchase needs an appraisal separate from the business value. The 7(a) program guarantees part of a private lender's loan, which leaves underwriting standards with the lender.