SBA 7(a) Restaurant Feasibility Study in Washington

Washington restaurants borrow above the national norm

Washington stands apart for the ticket, not the count. The state ranks 11 among states for 7(a) full-service restaurant loans, with 1,032 approvals across FY2017 to FY2026 worth $515.0 million, and restaurants are first of 39 classes inside Washington. A median of $305,250 is 1.24x the national 7(a) benchmark. Washington loans in the middle half cover $125,000 to $603,825, so even the lower quarter of Washington approvals starts at $125,000.

Banks, counties and franchising

KeyBank National Association holds 111 loans worth $55.3 million, followed by Columbia Bank with 76 loans and $19.6 million, U.S. Bank, National Association with 75 loans and $9.8 million, Banner Bank with 60 and $20.0 million, and GBC International Bank with 55 and $28.3 million. SBA lists each institution as it holds or held the loan; the list is not a statement about lending policy. Franchised operators account for 5.3% of loans. King County dominates with 427 loans, Pierce has 149, Snohomish 90, Spokane 57, Thurston 45, Kitsap 39, Clark 36, Whatcom 26, Benton 25 and Skagit 22.

Cancellation and charge-off floors

Of Washington approvals made through FY2024, at least 14.4% were cancelled, moving to 14.9% when loans still undisbursed are counted. In the cohort of 437 funded loans from FY2017 to FY2021, charge-offs to date have reached at least 4.8%, with 2.5% inside five years of approval. Cancellation is the larger of the two floors, so site control and permits should be settled early. Since loans may still fail, a reader should treat these as lower bounds.

Testing a Washington restaurant loan

Begin with the rent and occupancy cost. If a borrower is carrying a median near $305,250, each line of the build-out and equipment budget has to be defended, and the weekly sales needed to cover debt service should be compared with what comparable restaurants in the same district actually achieve. Labor cost should be modelled, and the study should model a slow opening and a downside in which sales stay below plan. Under 7(a), SBA guarantees part of a loan held by a private bank, so the appraisal separates going-concern value from any real estate pledged.