SBA 7(a) Restaurant Feasibility Study in Virginia

Northern Virginia's restaurant loan book

Restaurants top the list of asset classes financed through 7(a) in Virginia, ranking first of 39, yet the state sits only 18th among states by loan count. The file for FY2017 to FY2026 holds 505 loans worth $208.5 million. The median is $249,000, almost exactly the national figure at 1.01x, and the middle half runs from $62,500 to $538,700. Franchised units account for 13.7% of the loans, so independents dominate. What separates this cell is its loss record, which the data flags as distinctive.

Losses first

The 212 loans disbursed in FY2017 to FY2021 show 12.3% charged off to date, and 7.5% gone within the first five years. Those are floors, so the final share can only rise as open loans age. Cancellation is milder: at least 8.4% of the FY2017 to FY2024 approvals fell away after approval, or 9.5% when loans still undisbursed are treated as cancelled. A lender reading a Virginia full-service restaurant file should therefore weigh the sector's failure rate as seriously as the sector's popularity.

Fairfax and its neighbours

Fairfax County dominates with 130 loans, Loudoun follows with 53, Arlington with 31 and Prince William with 27. Chesterfield and Richmond City have 22 each, Fairfax City 21, Virginia Beach City 18, Henrico 12 and Alexandria City 11. The Washington suburbs therefore carry most of the book, with the Richmond and Hampton Roads markets behind them. Yearly approvals fell from 70 in FY2018 to 20 in FY2021, then rebuilt to 71 in FY2025 and 55 in FY2026.

The lender table

Manufacturers and Traders Trust Company holds 87 of the loans, worth $17.5 million, well ahead of TD Bank, National Association with 29 loans and $2.1 million, Hanmi Bank with 27 and $14.2 million, Newtek Bank, National Association with 26 and $6.1 million, and The Huntington National Bank with 23 and $9.9 million. Dollar totals and counts do not move together, which means some banks write many small loans and others a few large ones. The page tallies loans on each bank's books and passes no judgement on any lender.

Testing a Virginia restaurant

Because the loss floors are high, the study should not treat a restaurant as a safe bet. It has to establish the trade area's daytime workers and residents, the competing concepts within a short walk or drive, and the rent per square foot the sales can carry in a market where commercial rents vary widely between the inner suburbs and smaller cities. Labour and food cost assumptions should be explicit, and the sales ramp should assume a slow first year. A loan near $249,000 covers a typical build-out, and a figure toward $538,700 needs a reason. Repayment should be shown on sales well below the owner's hope, and the equity and the lease term should be visible to the lender.