SBA 7(a) Restaurant Feasibility Study in Texas

The largest restaurant book in the record

Texas is the biggest single market for 7(a) lending to full-service restaurants in this data: 1,991 loans and $1.31 billion in gross dollars from FY2017 to FY2026, with the state taking a rank of 3 among states for the program in this class and restaurants ranked 1 of 39 among Texas asset classes. What this program shows that the class across both programs does not is its loan size. The median 7(a) loan is $391,500, which is 1.59x what 7(a) restaurant loans reach nationally, and the middle half spans $150,000 to $870,500. Franchise loans make up 20.2%.

Lenders and counties

Heading the lender table, The Huntington National Bank holds 172 loans worth $94.4 million. PNC Bank, National Association follows with 121 loans and $39.7 million, then Bank of Hope with 71 and $31.3 million, Newtek Bank, National Association with 66 and $25.5 million, and JPMorgan Chase Bank, National Association with 58 and $24.6 million. The page states that SBA lists each loan under the current holder, so these are books held, not lending criteria. Dallas County has 311 loans, Harris 297, Tarrant 187, Collin 180, Travis 143 and Denton 137, with Bexar, Williamson, Fort Bend and El Paso behind.

The cohort floors

The cancellation floor is 12.7% of FY2017 to FY2024 approvals, or 13.3% if loans still awaiting disbursement are written off as cancelled. Among the 764 loans disbursed in the FY2017 to FY2021 cohort, 10.2% are charged off to date, and the five-year measure stands at 5.8%. Every figure here is a floor, not final outcomes. The gap between the two charge-off measures shows that losses keep arriving after the first five years.

Trend

Approvals fell from 249 loans in FY2017 to 124 in FY2020, then climbed to 298 in FY2025 and 229 in FY2026, with the FY2025 dollar total at $224.6 million. A restaurateur reading this should note how closely the volume followed the general business cycle.

Testing a 7(a) restaurant loan in Texas

Because 7(a) can fund working capital, equipment, a change of ownership or real estate, a study for a Texas full-service restaurant should say which of those the loan covers and test each. It should test the sales per seat against the site's trade area, the rent or ownership cost, labour and food costs, and the lease term against the loan term. Debt service coverage ought to be shown with sales below plan, since the charge-off floor here is high, and the appraisal should be explicit about business value versus real estate. Franchise status needs a plain statement of royalties and franchisor support.