SBA 7(a) Restaurant Feasibility Study in South Carolina

A median well above the national figure, and a high charge-off floor

South Carolina table-service restaurants borrowing under SBA 7(a) show a median loan of $350,000, which is 1.42x what the class takes elsewhere at the median. That ratio is the distinctive metric of the cell. The program approved 334 loans from FY2017 to FY2026 worth $210.3 million in gross dollars, with a spread from $150,000 to $878,800 across the middle of the book. The state ranks 24th for the program by loans, yet full-service restaurants are first of 39 in South Carolina's own list.

Outcomes on 118 funded loans

Charge-offs stand at 11.9% to date for loans funded by FY2021, with 6.8% charged off by the five-year mark. Both are floors on a cohort of 118 loans. Cancellation reached at least 13.7% of approvals from FY2017 to FY2024, and 14.1% if loans that never disbursed are counted as cancelled. The to-date charge-off floor is the largest figure in this group of restaurant pages, which should make any lender look hard at a borrower's reserves.

The holders

TD Bank, National Association holds 39 loans worth $8.9 million. Pinnacle Bank holds 20 worth $23.4 million, a much larger amount for each loan, SouthState Bank, National Association 17 worth $9.8 million, The Huntington National Bank 17 worth $3.9 million, and finally Newtek Bank, National Association with 14 worth $5.9 million. SBA records the present holder, and a ranking by loan count says nothing about quality. Franchise units make up 18.3% of the loans, a smaller portion than in quick-service lending. Greenville County leads with 62 loans, then Charleston with 42, Horry with 31, Beaufort with 29 and York with 28. Annual approvals ranged from 21 in FY2017 to 44 in FY2023 and FY2026.

Putting a South Carolina restaurant to the test

The program serves general business purposes, so the study must state what the loan pays for: build-out, equipment, a purchase or working capital. For a Charleston, Horry or Beaufort site, the study should separate seasonal visitor demand from the year-round resident base, because a coastal restaurant can look strong in summer and thin in winter. Rent against sales, labour supply and competing concepts need testing, as does the plan for the weakest months. The ticket sits above the national median, so build-out cost must be defended with sales that match. Show payment coverage on cautious covers and a slow first year. An appraiser will test the earnings behind any goodwill in the price.