Buying an American Deli franchise: SBA acquisition loan data
Since FY2018, SBA lenders have approved 18 7(a) loans to buy an existing American Deli (classified mostly as Limited-Service Restaurants), totaling $7.8M. The median loan was $420,000, 35% lower than the $645,250 median for all SBA-financed acquisitions. 6 of these loans were approved in the last two fiscal years.
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What this tells a buyer
- Price range to expect. Loan size tracks purchase price. Half of American Deli resale loans landed between $261,250 and $492,000.
- Lender experience exists. Metro City Bank alone has financed 7 American Deli resales.
- Guaranty. The SBA guaranteed 75% of the dollars lent here.
- What the file leaves out. The SBA file does not record franchisor transfer terms or fees.
Financing an American Deli resale
The median SBA 7(a) loan for an American Deli resale was $420,000 across 18 loans (FY2018 to FY2026). Metro City Bank, Hanmi Bank and PCB Bank have financed the most American Deli resales. Too few of these loans are old enough to measure a charge-off rate; the average for all SBA acquisition loans is 3.5%.
American Deli acquisition loans by year
| Fiscal year | Loans | Total approved | Median loan | |
|---|---|---|---|---|
| FY2018 | 3 | $958K | $295,000 | |
| FY2019 | 2 | $844K | $422,000 | |
| FY2020 | 1 | $250K | $250,000 | |
| FY2021 | 2 | $442K | $221,200 | |
| FY2022 | 1 | $440K | $440,000 | |
| FY2023 | 1 | $450K | $450,000 | |
| FY2024 | 2 | $1.4M | $720,000 | |
| FY2025 | 1 | $315K | $315,000 | |
| FY2026 | 5 | $2.6M | $600,000 |
How often do these acquisition loans fail?
Fewer than 20 American Deli acquisition loans are old enough to measure losses reliably, so no charge-off rate is shown. The benchmark across all SBA acquisition loans in the FY2018 to FY2021 cohort is 3.5% by count. Non-acquisition 7(a) loans (every other stated purpose) approved FY2018 to FY2021 charged off at 6.2%.
"Charged off" is the SBA's final loss action on a defaulted loan after collection efforts. It lags default by a year or more, which is why only older cohorts are measured. It is not the same as a delinquency rate, and loans still outstanding can still fail. See charge-off in the glossary.
Terms signed in the LOI shape the purchase agreement that follows.
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Lenders financing American Deli resales
| # | Lender | Loans | Share | Dollars | |
|---|---|---|---|---|---|
| 1 | Metro City Bank | 7 | 38.9% | $2.5M | |
| 2 | Hanmi Bank | 3 | 16.7% | $2.3M | |
| 3 | PCB Bank | 2 | 11.1% | $798K | |
| 4 | Bank of Hope | 2 | 11.1% | $755K | |
| 5 | VelocitySBA, LLC | 1 | 5.6% | $612K | |
| 6 | PromiseOne Bank | 1 | 5.6% | $400K | |
| 7 | Open Bank | 1 | 5.6% | $250K | |
| 8 | Loyal Trust Bank | 1 | 5.6% | $248K |
States where American Deli units are bought
| # | State | Loans | Share | Dollars | |
|---|---|---|---|---|---|
| 1 | Georgia | 12 | 66.7% | $4.3M | |
| 2 | Alabama | 2 | 11.1% | $731K | |
| 3 | Texas | 1 | 5.6% | $1.2M | |
| 4 | Tennessee | 1 | 5.6% | $620K | |
| 5 | California | 1 | 5.6% | $612K | |
| 6 | North Carolina | 1 | 5.6% | $315K |
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Questions buyers ask
How much do buyers borrow to buy an American Deli franchise?
The median SBA 7(a) loan for an American Deli resale was $420,000 across 18 loans (FY2018 to FY2026). The middle half of loans ran from $261,250 to $492,000. The loan excludes the buyer's equity and any seller note and may include working capital, so the price is usually higher than the loan.
Which banks finance American Deli acquisitions?
Metro City Bank has made the most SBA acquisition loans for American Deli (7, 39% of the total). Hanmi Bank, PCB Bank, Bank of Hope follow.
What interest rate and term do American Deli acquisition loans carry?
The average initial rate at approval was 7.62% (a blend of fixed and variable loans across several rate environments, so treat it as context, not a quote). The median term was 10 years.
Is an American Deli resale riskier than other SBA-financed acquisitions?
Too few American Deli acquisition loans are old enough to measure. The benchmark for all SBA acquisition loans is 3.5% charged off in the FY2018 to FY2021 cohort.
Where are American Deli units being bought with SBA loans?
Georgia (12), Alabama (2), Texas (1), Tennessee (1), California (1). State counts follow where the brand has units and where SBA lending is most active generally; see the state pages for the overall picture.
The purchase agreement decides what you bought, not the loan approval.
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Related
- All Limited-Service Restaurants acquisitions
- Georgia acquisitions
- Alabama acquisitions
- Texas acquisitions
- Metro City Bank
- Hanmi Bank
- PCB Bank
- All franchise brands
Brand name as recorded by lenders in the SBA file: "American Deli" (franchise code S0106). Figures are aggregates of public SBA data and are not provided or endorsed by the franchisor.