SBA 7(a) Car Wash Acquisition Feasibility Study Case Study: Repricing an Express Wash in Hurst, Texas Under SOP 50 10 8.1

An older express tunnel in the North East Mall trade area, offered at $4,500,000 to $5,000,000 with real estate, tested against the 1.25x historical coverage rule that governs SBA acquisitions from October 1, 2026. At list, coverage is 0.62x to 0.70x. Repriced to $3,950,000 with a standby seller note and buyer-funded repositioning, the acquisition clears 1.25x on history and reaches 2.18x at stabilization. Written determination: feasible as resized.

Model study prepared by MMCG Invest | Michal Mohelsky, J.D., FMVA | October 1, 2026

MMCG concludes that the acquisition of the subject express car wash is not feasible as proposed at the asking range of $4,500,000 to $5,000,000 under SBA 7(a). At $5,000,000 the historical cash flow covers the proposed debt service 0.62 times, and at $4,500,000 it covers 0.70 times, against the 1.25x historical coverage that SOP 50 10 8.1 requires for an initial acquisition. The acquisition is feasible as resized at a purchase price of $3,950,000, allocated $2,000,000 to real estate and $1,950,000 to the business, financed with a 7(a) loan of $2,665,000, a seller note of $525,000 on full standby and $1,660,000 of buyer cash that funds the equity injection and the full $650,000 repositioning budget. At that structure the loan meets 1.25x on the last fiscal year's EBITDA of $398,000, the business purchase price falls below the $3,000,000 quality of earnings threshold, and the repositioned wash reaches 2.18x coverage in its third year. The determination is conditioned on seller-provided tax returns confirming the historical EBITDA and on a City of Hurst zoning verification letter confirming the property's conforming or nonconforming status.

This is an MMCG model study: a complete acquisition feasibility analysis performed on a model site in a real market using public data, prepared to show lenders and buyers how MMCG underwrites an SBA 7(a) car wash purchase under SOP 50 10 8.1. The subject is a composite. Its location, trade area, zoning, competition and asking range come from the public record for the North East Mall trade area of Hurst, Texas, where an express car wash is publicly marketed at $4,500,000 to $5,000,000 with real estate. Its operating history is modeled, because no listed car wash publishes audited financials, and the figures do not represent the books of any specific business. MMCG has no relationship with any seller or broker in the trade area. Figures drawn from government sources, operator websites and listing platforms are identified as such; figures labeled MMCG assumption or modeled are underwriting inputs; and items that could not be verified at the study date are disclosed in the Conditions and Limitations section.

The Project will operate as a repositioned 120-foot express exterior tunnel car wash under an unlimited monthly membership model on a 1.15-acre site in the North East Mall retail trade area of Hurst, Tarrant County, Texas, where the property sits among the regional mall, big-box retail and the SH 26, Precinct Line Road and Airport Freeway corridors that carry the area's shopping traffic. The existing physical program comprises a 2014 masonry tunnel building with a 120-foot conveyor, two pay stations without license plate recognition, a legacy tunnel controller, 18 free vacuum stalls under canopy and no water reclaim; the repositioning replaces the controller and point of sale, converts one pay lane to a license plate recognition member lane, upgrades the dryer package and chemical delivery with a protectant arch, retrofits water reclaim, replaces site and canopy lighting with LED fixtures, and refreshes the vacuum system, all within the existing building footprint and site layout. The wash will operate seven days a week from 7:00 a.m. to 9:00 p.m. with a general manager and four full-time-equivalent attendants. The buyer will acquire the land, building and business, holding the real estate in an eligible passive company that leases to the operating company. The repositioned wash targets the membership customer the current program does not capture, with a plan ladder of $21.99, $26.99, $31.99 and $36.99 per month.

Marketing and Sales Strategy

The relaunch is timed to the completion of the license plate recognition lane and is anchored on converting the existing retail customer base, which accounts for 52,000 washes a year, into members at the pay station with a first-month introductory price. The legacy membership base of 1,450 members is migrated to the new plan ladder with a grandfathered rate for twelve months to protect retention through the transition. Acquisition runs through geofenced mobile advertising around North East Mall and the surrounding big-box retail, a member referral credit and family plans. Business outreach targets fleet accounts for dealerships, rental car operators and service companies along Airport Freeway and Precinct Line Road. Retention is managed through card-failure recovery, a pause option and plan upgrades at the pay station.

Amenities (after repositioning)

Source: U.S. Census Bureau, QuickFacts, Vintage 2025 estimates, ACS 2020 to 2024 and 2022 Economic Census.

Hurst is a mature, slightly shrinking residential base with retail sales of $39,689 per resident, a level that reflects the regional draw of North East Mall and the surrounding big-box retail rather than local households. Demand for the subject rests on shopper and commuter inflow and on taking membership share from established competitors, not on rooftop growth, and the membership ramp is set accordingly.

MMCG identified six operating car washes within roughly two miles of North East Mall, five of them express tunnels. Membership prices are taken from operator websites where the operator publishes them.

Competitor Number 1 Quick Quack Car Wash, Airport Freeway. This express exterior tunnel is located at 701 Airport Freeway, Hurst, TX 76053. The operator's location page advertises its Unlimited Wash Club, a members' quick-access lane and water recycling; plan prices are not displayed on the location page, and aggregator listings place the brand's plans between $22.99 and $37.99 per month.

Competitor Number 2 Club Car Wash, Grapevine Highway. This express exterior tunnel is located at 912 Boulevard 26, Hurst, TX 76054. It offers Rookie, VIP, Elite and MVP membership plans. A mapping directory lists the same address under a prior car wash brand.

Competitor Number 3 Zips Car Wash, Precinct Line Road. This express exterior tunnel is located at 1641 Precinct Line Road, Hurst, TX 76054. A directory lists the same address under a prior express brand. Plan pricing was not published for the location at the study date.

Competitor Number 4 Groove Car Wash, Grapevine Highway. This express exterior tunnel is a new ground-up build located at 12 Grapevine Highway, Hurst, TX 76054, documented in its general contractor's project portfolio. Its opening date was not published at the study date.

Competitor Number 5 Rapids Car Wash, Grapevine Highway. This exterior express wash with hand preparation and towel drying is located at 371 Grapevine Highway, Hurst, TX 76054. Business-supplied directory text lists washes from $6 to $12 and a 30-day pass at $28; the prices are undated.

Competitor Number 6 Tommy's Express, Euless Boulevard. This express exterior tunnel is located at 250 E Euless Boulevard, Euless, TX 76040, on the operator's own location page. Plan pricing was not verified for the location at the study date.

A directory also lists Xpress Car Wash at 8409 Bedford Euless Road, Hurst; its format was not verified. With five express tunnels within two miles, including one new build, the trade area is supplied, and the sensitivity cases test both a stalled membership ramp and a further new entrant.

Zoning is the decisive entitlement question for a repositioning in Hurst, and the verified code text shapes the capital plan. Hurst's Mixed-Use Planned Development Overlay, Section 27-15.4(e), lists car washes among the uses specifically not permitted. Under Section 27-15.4(f), an existing nonconforming use in the overlay may continue provided it is not expanded, enlarged, razed and reconstructed, moved or otherwise modified from its original footprint, and if the use is discontinued or abandoned for six months or longer, any future use must conform. The overlay boundaries are set by Exhibit 1 to Ordinance No. 1932, and whether the subject's parcel lies inside the overlay was not verifiable from public sources.

Hurst's citywide nonconforming use rules in Section 27-24 apply in either case if the wash does not conform to its base district. No structural alterations may be made except those required by law or ordinance, and any enlargement or extension requires a special exception from the Zoning Board of Adjustment. The land area and floor area of a nonconforming use may not be increased. Damage up to 50 percent of replacement value may be repaired by permit. Nonconforming status ends on abandonment, which includes six months out of use and the removal of the special equipment and furnishings peculiar to the use without replacement within six months. Hurst's code is current through Ordinance No. 2624, adopted May 12, 2026.

The repositioning budget is designed to this text. Every item replaces equipment within the existing building and site layout; nothing lengthens the tunnel, adds floor area, extends the canopy footprint or alters the structure. Equipment swaps are sequenced in overnight and weekend windows so that the wash never closes for more than a few days and no equipment is out of service near the six-month abandonment trigger. Hurst's performance standards also prohibit noise above the ambient level discernible beyond the property line, so the dryer upgrade specifies a package rated at or below the noise of the equipment it replaces. A conveyor lengthening, a building addition or a demolish-and-rebuild is not part of this plan, and any such change would require Zoning Board of Adjustment relief if the use is nonconforming.

Listing platform panels for Texas car washes report median earnings multiples between 5.75x and 10.20x depending on the panel cut, and industry valuation sources place single express sites at 4x to 8x capex-adjusted EBITDA, against 11x to 18x for private equity platforms and approximately 9.0x for the 2026 take-private of the largest U.S. operator. Asking prices with real estate bundled routinely run above the business-only bands because the real estate carries its own value.

The real estate allocation separates the two. At the $2,000,000 real estate value used in this study, a market rent at the April 2026 average asking cap rate of 6.21 percent for car wash sale-leasebacks is $124,200 a year. The historical EBITDA of $398,000 covers that rent 3.2 times; after the rent, the business earns $273,800, which at 4x to 8x supports a business value of $1,095,000 to $2,190,000. Added to the real estate, that range is $3,095,000 to $4,190,000, and the resized price of $3,950,000 sits in its upper half.

The subject's last fiscal year is modeled as follows.

The coverage tests use EBITDA of $398,000. The profile is the one most older express washes bring to market: a thin membership base that produces 40 percent of wash revenue against 76 percent at the largest U.S. operator in 2025, a retail-heavy volume that the industry's 2026 data shows declining near 4 percent a year, and maintenance cost per car elevated by aging equipment.

SOP 50 10 8.1 applies to 7(a) applications received by SBA on or after October 1, 2026. For an initial acquisition it requires debt service coverage of at least 1.25x on historical cash flow, using either the last fiscal year or the average of the last two, and does not permit the lender to rely on post-closing projections. The equity injection for an initial acquisition is at least 10 percent and cannot be reduced. Seller debt on full standby can count toward no more than half of the required injection. The business portion of the loan amortizes over no more than 10 years, while real estate amortizes over up to 25 years. A lender-commissioned quality of earnings review by an independent financial professional is required when the business purchase price is $3,000,000 or more.

The test below assumes the asking price, closing costs of $140,000, working capital of $110,000, a 10 percent injection, a $2,000,000 real estate allocation and a variable rate of 9.75 percent (the Wall Street Journal prime rate of 7.00 percent, effective September 17, 2026, plus 2.75 percent). Repositioning capital is excluded, which favors the asking price.

Neither price clears the test, and the gap is not marginal. The 10-year amortization of the business portion is a large part of the reason: the same $4,725,000 loan amortized entirely over 25 years would carry debt service of $505,275 and coverage of 0.79x, still failing but by less. Under SOP 50 10 8.1, the buyer cannot close the gap with a projection of what the repositioned wash will earn.

The maximum debt the historical cash flow supports at 1.25x is $2,666,098: the real estate portion of $2,000,000 consumes $213,873 of the $318,400 of allowable debt service, leaving room for a business portion of $666,098. At the standard 10 percent injection and with no repositioning capital, that debt supports a purchase price of about $2,712,000. Any price above that level requires equity beyond the minimum, standby seller debt, or both.

The quality of earnings threshold turns on the allocation. At $5,000,000 with $2,000,000 of real estate, the business purchase price is exactly $3,000,000 and the review is required; at any lower price, or at a higher appraised real estate value, it is not. The going-concern appraisal's allocation between real estate, equipment and intangible value therefore decides whether the lender must commission the review.

The 7(a) loan carries annual debt service of $318,228 and historical coverage of 1.25x on the last fiscal year's EBITDA. The SBA guaranty on a loan of this size is 75 percent, or $1,998,750, and the guaranty fee of approximately $72,000 under the fiscal 2027 fee notice is included in closing costs. The buyer's cash of $1,660,000 exceeds the required 10 percent injection of $485,000 on its own, so the seller note is not needed to meet the injection; it bridges the gap between the seller's price expectation and the debt the history supports, and it stays on full standby so that it carries no debt service in the coverage test. The business purchase price of $1,950,000 is below the $3,000,000 quality of earnings threshold.

The structure reflects the central consequence of SOP 50 10 8.1 for car wash acquisitions: acquisition debt is sized on what the wash has earned, so the capital for what the wash will earn after repositioning comes from the buyer. The $650,000 repositioning budget is buyer equity, not borrowed money.

The budget is an MMCG allowance; vendor quotes are required before closing. Section 232 duties on imported steel and aluminum have stood at 50 percent since June 4, 2025, and the contingency carries an allowance for equipment price changes between quote and order. The work is sequenced over the first four months after closing, with the controller, point of sale and license plate recognition first so that the membership relaunch can start while the dryer, chemical and reclaim work follows.

Year 1 is the first twelve months after closing. Members are modeled at 2.5 washes per month after the relaunch. The Year 3 membership of 2,850 requires 214 new members per month at 7.5 percent monthly churn, equal to 6.0 percent of Year 3 retail visits, below the 9.8 percent conversion that industry data reports for sites with 2,000 to 4,000 members.

Variable cost per car falls from $2.45 to $2.20 after the repositioning because maintenance cost per car declines with new equipment and the reclaim retrofit lowers water purchases. Labor is a general manager and four FTE attendants at $17.50 per hour with a 15 percent burden, escalating 3.5 percent per year; the Dallas-Fort Worth mean wage for cleaners of vehicles and equipment rose from $14.19 in May 2022 to $15.69 in May 2023 and $16.32 in May 2024, about 7.2 percent a year. Year 3 revenue of $1,564,321 is in line with the median gross sales reported for the largest express franchise system, and the Year 5 member share of wash revenue reaches 65.1 percent, still well below the 76 percent the largest operator reported for 2025.

The resized loan is sized on history, so the post-closing cases test the margin above a loan that already meets 1.25x before any repositioning benefit. The combined downside, in which the membership ramp stalls and a new tunnel opens, returns EBITDA to roughly its pre-acquisition level and coverage to 1.20x. In every case the loan remains covered, which is the practical meaning of underwriting an acquisition on history rather than on the turnaround.

The Texas Comptroller's guidance states that washing a car is not a taxable service under the Texas Tax Code, so wash and membership receipts are modeled without sales tax; supplies and equipment purchased by the wash are taxable at the Hurst combined rate of 8.25 percent. The Texas franchise tax no-tax-due threshold is $2,650,000 of annualized total revenue for 2026 and 2027 reports, so the operating company owes no franchise tax at the projected revenue and files only its information report. The City of Hurst adopted a tax year 2026 rate of $0.668422 per $100 of valuation, and Hurst-Euless-Bedford ISD's tax year 2025 rate was $1.028900. The Tarrant County, Tarrant County College and hospital district rates for 2026 were not confirmed at the study date, and property tax is carried at an MMCG estimate of a combined rate near 2.2 percent applied to the real estate and taxable business personal property.

An industry analysis of SBA 7(a) and 504 loan-level data through March 31, 2026 counts 317 car wash loans in the Dallas-Fort Worth market totaling $648 million, at a median of $1.8 million and a charge-off rate of 1.1 percent, against 4.4 percent nationally for loans made since fiscal 2010. MMCG's own analysis of SBA loan-level data shows a 5.25 percent charge-off rate on resolved 7(a) car wash loans since fiscal 2010 against 7.45 percent for all industries; the two figures measure different scopes. The market's credit record supports lender appetite for a well-structured acquisition, and it does not change the property-specific facts of a supplied trade area and a shrinking residential base.

The determination of feasible as resized is subject to the following conditions precedent:

The following items could not be verified from a primary source at the study date and are disclosed: the address, build year, conveyor length, acreage and financial records of any specific listed car wash in the trade area, and the dates and sequence of its two asking prices; the overlay status of individual parcels; Hurst base-district permissions and stacking standards for car washes; TxDOT station counts on SH 26, Precinct Line Road, Pipeline Road and Airport Freeway; operator-published membership prices for Quick Quack, Club, Zips and Tommy's Express at the Hurst-area locations; the opening date of Groove Car Wash; 2026 Tarrant County, Tarrant County College and hospital district tax rates; Hurst water and sewer rates, impact fees and pretreatment rules; Hurst's drought contingency stages for commercial car washes; May 2025 Dallas-Fort Worth wages for cleaners of vehicles and equipment; and the primary SBA text of SOP 50 10 8.1, whose acquisition provisions are taken here from consistent published summaries, including one reading that treats the business-portion amortization as a blended maturity rather than a flat 10-year limit.

This model study applies the methodology described on MMCG's SBA car wash feasibility study and car wash feasibility study pages. MMCG prepares car wash acquisition and new-build feasibility studies for SBA 7(a), SBA 504, USDA B&I and conventional lenders nationwide, with engagements from $4,900 and delivery in 9 to 16 business days.