Types of Businesses Most and Least Likely to Receive SBA Loans

George Heaslip, "The Loan Professor"

George Heaslip, “The Loan Professor”

It’s no secret that some categories of small to medium size businesses are more likely to receive SBA loans than others.

We are indebted to George Heaslip, “The Loan Professor” for the following ranking.  George is a SBA loan originator of many years experience.  He is based in South Florida and can be reached at (561) 329-1315 or by email at heaslip@comcast.net.

Based on his experience and opinion, George periodically issues a ranking of business types most and least likely to receive SBA loan application approval.  It’s a star rating method with five stars being the most likely to receive loan approval.

This is his latest ranking:

***               A/C and Heating

**                 Advertising/Promotion

zero              Adult Merchandise

***               Agricultural (sod, seeds, equipment)

**                Aircraft Maintenance

*                  Air Duct Cleaning

**                Alarm Companies, Residential and Industrial

**                Amusement/Theme Parks established, with real estate

****             Animal Care and Grooming Facilities, with real estate (Cats, dogs, horses)

**1/2           Animal Grooming, no real estate
** Antiques Dealer

zero              Apartment Houses and centers (investment properties)

***               Appliance Sales/Repairs

**                 Art Gallery

**                 Arts & Crafts

**                 Art Framing

****             Assisted Living Facilities With R/E (Dropped from 5-stars based on the                                                   economy)

****           Auto Body Shop with Real Estate

***               Auto Body Shop, leased facility

****           Auto Car Wash with real estate

***               Auto Dealership (new, larger facility)

zero             Auto Delivery

**                 Auto Glass

zero             Automobiles/Rental

****           Auto Parts Shops with real estate (including tires)

***              Auto Painting with real estate, otherwise **

***              Auto Parts/Accessories, leased facility

**                 Auto Repair Shops with Real Estate (Might be environmentally clean today,                                             but not tomorrow)

**1/2           Auto Sales Centers with real estate Auto Salvage
Aviation (service centers)

*                   Awards/Prizes/Engraving

**1/2           Bagel Restaurant

**                 Barber Shop

***1/2         Bakery, with real estate, in business for several years.

**                 Barges (sea transport)

***1/2         Bar/Restaurant, with real estate, in business for several years.                              Otherwise **

*                  Beauty Salons/Tanning Salons

***              Bed & Breakfast, established, and with real estate

*                   Billiard Parlor

***              Boat Storage Facilities, with real estate

zero             Boat Tours

*                  Book Store

*1/2             Bookkeeping Services

*1/2            Boutiques

***1/2         Bowling Alley/Lounge/Restaurant, with real estate

**                 Bridal/Baby Shops

**                 Building Materials

**1/2           Building Renovations

*1/2            Business Brokerage Franchise Offices

zero             Cards, Greeting

**                Carpet Cleaning

****            Car Wash, established, with real estate

*1/2             Cartridges Refill (Printer)

zero             Casino

***              Catering Facilities with real estate, established

***              Cement Products Manufacturer With Real Estate, otherwise

****            Child Care Centers (Favorite by banks, if land and building are included)

**                Child Care Center, no real estate

****           Children Party Facility, with real estate

*1/2             Chiropractic

zero             Churches

zero             Cigar Store

**                Cleaning/Clothing

***              Cleaning & Janitorial

***              Closet Interior Manufacturers

**                Clothing

***              Coin Laundry

zero             Collection Agency

*****           Commercial Building For Business Expansion

*                  Computer Supplies (since they can be ordered on-line)

**                Construction/General Contractor

****           Consulting Companies with fine tax returns (Legal,                                                                                 Accounting, Insurance , Immigration Related)

***              Consignment Shops

***              Contractor, established

*                  Convenience Stores (** If with real estate)

***               Crane Services – Construction/Equipment Install

**                Damage Restoration

zero              Data Management

***              Delis with real estate

**                Delivery Services

*****           Dentists/Dental Practices (If a new center is to be purchased, this is an easy                                       one)

****           Distribution Centers, with real estate, otherwise ***

*****          Doctors (Very easy deals!)

****           Doctors with a patented product ready for production and                         sales

**                Document Shredding

****           Dog and Cat Kennels with real estate

***              Dry Cleaners and Laundromats without real estate

**               Dry Cleaners with real estate

**                Educational/Schools

**                Embroidery Services with commercial accounts

***              Electrical Contractors

**1/2           Employment Placement Companies

***              Environmental Cleanup

*                  Electronics/Computers

**                Equipment Sales, Services & Rentals

***              Above, If  established and with real estate

****           Equipment Suppliers/Installers

*                  Event Planning

****            Export Products Manufacturers

****           Exterminating Companies

****           Fabrication Factories, with real estate.

*****           Factories (Manufacturing)

***              Farm Equipment Sales and Servicing

****            Fast Food Franchises, with real estate, and on the Franchise Registry

*                  Financial Related

**                Firearms

***1/2         Fireplace and Furniture Manufacturers

**                Fish Farm (Example: Tilapia)

zero             Fishing Vessels

***              Fitness Health Club (Expansion to new facility, not leased)

***              Flooring Contractor

**                Floral Centers

**                Food Business Retail

**                Flowers

*****           Franchises (With 100 or more locations, and on the SBA Franchise Registry –                               Example: Taco Bell and Subway).

****             Franchises – Subway, suddenly down from 5 stars due to no profit promotions.

zero              New Franchises

***               Freight Forwarding, with real estate

zero             Fund Raising Services

*****           Funeral Homes with Real Estate

***              Furniture Retail, if real estate is included

zero             Game Room

***1/2         Garden Centers, Indoor and outdoor, established, growing sales

**                Gas Station/Truck Stop, if real estate is included

*                  Gas Stations with Convenience Stores

zero             Gift Shop

***              Glass Company

**1/2          Golf Courses, with real estate, solid 3-year growth records

*                  Golf Store (number of golfers per year is dropping!)

*                  Gourmet Catering

***1/2         Gravel Pits & Dredge Companies

***               Grocery Store With Real Estate, otherwise * *

*                  Group Transportation

**                Guard Company, security

*                  Guided Tours

*                  Gyms

zero              Hair Salon

*****           Hardware Stores With Real Estate (If no competition from Home Depot or                                                Lowes. Ace is a good example)

***              Health Products Store

*                  Hobby Shops

****            Home Health Care Services

****            Hostels with growing rent rolls, and with real estate

****            Hotels/Flagship, otherwise **

**                Hotels and Motels/Non Flagship (Forget about these!)

*                  Ice Cream/Yogurt/Ice

zero             Import Companies

zero              Income/Investment Properties, like strip malls, apartment                                                                    houses

****             Industrial Buildings/Condos & Warehouses, 51% Owner Occupied

**                Insurance Agencies (franchise)

****            Interior/Exterior Design Units Manufacturers (Closets,                                                                          Fireplaces, BBQ Patios)

*                  Internet Related

***              Janitorial

****             Janitorial Services Companies (including parking lots maintenance)

zero             Jet Ski Rental

**                Jewelry/Retail

**                 Land, only if 51% owner occupied construction in 6 to 8 months

***1/2         Landscaping with commercial accounts. Otherwise * 1/2

**                 Landscape Companies with legal employees

****           Law Firm

zero            Limo Business

***              Liquor Package Store with real estate, otherwise **

**                Locksmith

***              Lounge/Liquor with real estate, otherwise *

****           Machine Shop, with real estate, otherwise ***

*                   Maid Services

**                 Mail Package Services

*****           Manufacturing Facilities with Real Estate (Lenders love these deals).

*****           Manufacturing Facilities that export

****             Manufacturing Facilities without real estate

***              Marinas with real estate

***1/2         Marinas with established restaurant and real estate

**                 Marine Related

*                   Marketing Company

*                   Massage

*****           Medical Related, except chiropractic 
Home Health Care
Doctors, Dentist and                                                Vets
MRI/CT/PET Scan Facilities (with real estate)

zero              Medical Software

*****           Medical Product Distribution Centers with real estate

****           Medical/Supplies Distribution Businesses, leased facility

***1/2         Metal Fabricators, with real estate, track record of business growth

zero             Micro Breweries

***1/2         Millwrights

zero             Mobile Homes

*****           Motel/Flagship with real estate, otherwise **

**                 Movers

*                   Movie Theaters (Attendance is down over 18%)

*                   Music

*****           New Building or Upgrade/Expansion (Not a problem for expanding businesses                            that have tax returns showing net profit growth over the last three years.)

zero             Not For Profit Organizations

zero             Nail Salon

**                Nursery/Plants

****1/2       Nursing Home, with real estate

***              Nursing Homes without real estate

**                Nutritional Stores, if a franchise on the registry

zero             Office Building, not 51% applicant occupied

*****           Office Building 51% applicant occupied

**                Painters

zero              Parasailing

**1/2          Parking Lot Cleaning and Maintenance Companies

*                  Party Goods

****           Pawn Shops (If in a freestanding building, otherwise ** stars)

**                Personal Services

zero            Personnel and Staffing

**                Pest Control Companies

****           Pet Centers with real estate

****           Pharmacies

*****          Pharmacies that do compounding

*                  Pizza Shop

zero            Pressure Cleaning

zero             Phone Sales

****             Pre-School With Real Estate, otherwise **1/2

*                  Printer cartridge refill stores

*                 Printing and Typesetting

****             Professional Service Companies (Accounting, Legal) that want to move to a                                        larger location or eliminate high interest loans

***              Plumbing Supply Companies

**1/2           Pool and Spa

*                   Residential Realtors

Pet Kennels (See Dog above)

*****           Recycling Facilities, established, with real estate

*                   Rental Businesses

**                 Repair Services, if licensed

****1/2       Restaurants, free standing building, in business many years

***               Restaurants (That are franchises, and have excellent financial statements)

**                 Restaurants, other

***               Retail Miscellaneous, free standing business, in business many years

****             Retail Businesses (With three years of fine historical cash flow)

***               Roofing Contractor

****           Roofing Maintenance Companies

*                   Routes

zero             Satellite Dishes

**                 Security Systems

*****           Self Storage Facilities

**                 Sign Companies

**                 Site Preparation

zero             Skin & Massage

**1/2           Recreational Facilities and Clubs

*                   Security Related

*                   Shoes/Shoe Repairs

**                 Skating Rinks with real estate

**                 Sod Distribution

***              Software Services Companies (With 3 years of steady growth)

***              Sports Bar, established, with real estate

**                 Sports Related

*                   Start Up Businesses (difficult, requires 30% down, heavy collateral backup)

zero             Strip Malls

**                 Sub Shop (Sandwiches)

***               Supermarkets (Flag)

*                   Surf/Activewear Shop

*                   Tailoring

*                   Tax Preparation

zero             Taxi Business

*                   Teeth Whitening (non-Dentist location)

zero             Telemarketing

*                   Telephone Related

*****           Therapy Centers, and Therapy In-Home Services

*                   Tobacco Related

***               Towing Services

***               Trade Contractors

****           Training Schools (established and for-profit) with Real Estate,                                                                        otherwise **

**                 Transportation

zero             Travel Agencies

**1.2           Tree Farm

***               Truck Repairs (with real estate, otherwise **)

****             Truck (and Car) Washes with real estate

****1/2       Truck Fleet Services (Towing and Repair), with real estate

*                   Tutoring

zero             Vacant Commercial Land

***               Vacant Commercial Land with permits to build 51% owner occupied in 9                                               months

zero             Valet Parking

**                 Variety Store non franchise

***               Variety Store, franchise with real estate

zero             Vending Machine Routes

zero             Video Related

****           Uniforms Manufacturing, with real estate

zero             Used Car Dealerships/Lots

****             Warehouses, where the buyer occupies 51% or more of the floor space

**                  Water/Damage Repair

**                 Water Purification

*                   Web Hosting

*                   Wedding Gowns

**                 Well Drilling

***1/2         Wholesale Distribution, with real estate, otherwise **

**                 Yogurt Store

If you have any questions about this list, or are interested in submitting a SBA loan application, contact George Heaslip  at (561) 329-1315 or by email at heaslip@comcast.net.

#     #     #

William Bruce is an Accredited Business Broker and Appraiser assisting buyers and sellers of privately held businesses in the transfer of ownership.  He currently serves as president of the American Business Brokers Association.  His practice includes consulting services nationally on issues of business valuation and transfer.  He may be reached at (251) 990-5934 or by email at WilliamBruceOnline@gmail.com.  His business brokerage website may be viewed at www.WilliamBruce.net.
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About William Bruce

President, American Business Brokers Association / Business Broker and Accredited Business Intermediary assisting business buyers and sellers with the transfer of ownership / Author: How to Buy a Business.
This entry was posted in Business Valuation & Appraisal, Buying or Selling a Business, Franchises and tagged , , , . Bookmark the permalink.

2 Responses to Types of Businesses Most and Least Likely to Receive SBA Loans

  1. Pingback: Monthly Motivation for Selling Your Business 02.14 - Synergy Business Services

  2. Dale Pearson says:

    Thank you Will and George,

    This is a great list! Now, can anyone provide us with an outline, “elevator pitch” to prospective buyers – an easy to read, in general, what the process and requirements are for an SBA loan? Say, an overview and/or above with one star, two star, three star, four stars? Thank you again!

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