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CAR WASH LENDING UPDATE

02/27/14

For many years Coast Commercial Credit has been asked by inquiring new investors if car washes were a good investment. According to the company, they now have the answer: yes. Data released in the Combined Loan Performance Report from the Small Business Administration show car washes outperform both franchised business and general small business by a wide margin, the company said.

According to the report, the SBA loan failure rate for the car wash industry was significantly lower than both franchises and general small business. For the years 2001 to 2010, SBA loans to general small business failed at a rate 22.4 percent greater than loans to the car wash industry. SBA loans to franchises failed at a rate 42.2 percent greater than car wash loans.

In addition, the charge-off rate (the percentage lost by banks writing SBA loans) for general small business was over double that for car washes and the franchise charge-off rate was over four times greater than for loans made to car washes.

The SBA loan failure and charge-off data is a comparison of a combination of SBA 7(a) & 504 loans to <I>all <P>franchises and to <I>all <P> industries defined by NAICS codes versus SBA loans to the car wash industry. This comparison does not include conventional bank loans or other types of loans. 



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