The Labor Lever: How Automation Is Re-Pricing DSCR in SBA-Financed Special-Purpose Assets

1. Executive Summary

Labor is no longer the residual line on a special-purpose pro forma. It is the lever. Across the five asset classes that dominate SBA 7(a), 504, and USDA B&I special-purpose paper, namely limited-service hospitality, express car washes, self-storage, laundromats, and unattended fueling, the operators with the lowest full-time-equivalent count per revenue dollar are not just generating higher EBITDA margins. They are clearing debt-service coverage thresholds that operators on traditional staffing models can no longer hit at current capital costs. With WSJ Prime at 6.75% since December 11, 2025, SBA 504 25-year debentures pricing at a 4.59% note rate (effective all-in roughly 6.0% to 6.2%) (3), and 7(a) coupons sitting at Prime plus 1.5% to 2.75% on most quality SPA paper, every 100 basis points of margin retained by automation is worth approximately 0.10x to 0.25x of DSCR on a typical $1M to $5M project at SBA terms.

The three sharpest takeaways for credit officers and sponsors:

First, the asset classes where automation is genuinely re-pricing risk are the ones where labor has historically been the largest single direct operating expense and where the customer does not interact with the labor as part of the product. Hotels, car washes, storage, laundromats, and fueling all qualify. Memory care and full-service restaurants do not.

Second, the SOP 50 10 8 framework effective June 1, 2025 closes the door on third-party "absentee" structures that automation has tempted some sponsors to attempt (23). The "meaningful oversight" standard is now the binding constraint on how far operators can lean into a remote-management model.

Third, automation lowers labor cost but raises tech-stack risk and concentration risk. Underwriters pricing to industry-standard stacks (Sonny's, OpenTech, Janus Nokē, PTI, CleanCloud) can hold collateral haircuts in the 10% to 20% range. Proprietary stacks deserve 30% to 60%.

2. The Thesis: Labor as the DSCR Lever

For two decades, special-purpose lenders have priced these assets primarily on cap rate, brand, and location. That framework is breaking. The single largest line item on every operating statement in this report, labor, is moving in two directions simultaneously: up in dollars and down in headcount. CBRE's Trends® in the Hotel Industry shows hotel labor expenses rose 4.8% on revenue growth of just 2.3% in 2024, while hours worked at the average sample property are down 7.4% since 2019 (1). Hotels are paying more for fewer hours. The same compression is visible in NACS State of the Industry data: 2.75 million industry jobs at an average $15.04 per hour in 2025, with wages and benefits remaining the single largest direct store operating expense (2).

The lever works like this. On a stabilized special-purpose asset financed with SBA 504 at an all-in rate near 6.18% and a 25-year amortization (3), every dollar of operating expense saved drops nearly intact to NOI, and from NOI to DSCR. A $4,000 monthly payroll reduction at a single self-storage facility, the figure Jim Ross of 3 Mile Storage Management documented in his July 2022 transition to OpenTech's Remote Manager (4), is $48,000 of annual NOI. On a $3.5M 504 stack, that is roughly 0.20x of incremental DSCR. The same arithmetic applies, with different magnitudes, across all five asset classes covered here.

What follows is asset-class by asset-class. The thesis is uniform: in each segment, the labor savings of an automated operator now exceed the revenue compression that automation produces, on a risk-adjusted basis, by enough to justify a measurable DSCR uplift over the traditional model. That uplift, prepared into the credit memo correctly, is the difference between a 1.18x deal that gets declined and a 1.32x deal that closes.

3. Asset Class 1: Limited-Service / Select-Service Hospitality

Hotels are the asset class where the contradiction is sharpest. Industry labor as a percentage of revenue rose from 31.4% in 2022 to 32.4% in 2023 across CBRE's 2,456-property sample, and labor now represents 51.7% of all expenses before gross operating profit (1). The same source confirms the trend extended into 2024. STR/CoStar year-end 2024 data shows industry occupancy was 63.0% on a $158.67 ADR for a $99.94 RevPAR, up just 1.8% on the year (6). Revenue is barely moving. Labor is.

The market is responding by repricing brand. Marriott's $355M acquisition of citizenM, announced April 28, 2025 and closed July 22, 2025 (37 hotels, 8,789 rooms at closing), was an explicit bet on the select-service, technology-forward, low-FTE format (7). Anthony Capuano framed it on the announcement: "We are thrilled to add citizenM as a unique, differentiated offering to our select-service brand portfolio as we continue to strengthen Marriott's foothold in this valuable market segment around the world" (7). citizenM operates with roughly half the FTE-per-room of a comparable upper-midscale property by collapsing front desk, F&B, and housekeeping handoffs into a unified app-and-kiosk stack.

The Sonder counter-example matters. Sonder reported FY2024 revenue of $621.3M and Q4 2024 RevPAR of $180 (up 19% year-over-year) on 9,900 live units, with cost of revenue excluding D&A at $377.2M, or 60.7% of revenue (8). The August 2024 Marriott licensing agreement was the closest the industry has come to validating a fully tech-native lodging operator inside a major flag's distribution (7). It collapsed: Marriott terminated the agreement effective November 7, 2025 citing Sonder's default, and Sonder filed Chapter 7 the following day (7) (8). The lesson for SBA hotel underwriting is not that the tech-forward model failed. It is that tech-forward operations do not save a fundamentally over-leveraged balance sheet, and that the integration risk of a proprietary stack onto a flag's central reservation system is not zero. Francis Davidson's much-quoted Skift critique still stands ("The fact that hotels still have a person typing in who-knows-what when you're checking in at a hotel is a complete joke. On everything from mobile keys to smart locks and housekeeping management, it's really laughable how far behind the hotel industry is from a tech perspective") (9), but the operator who delivered that critique is in liquidation.

For SBA 7(a) and 504 limited-service paper, the practical implication is that mobile check-in, smart-lock guestroom access, automated housekeeping dispatch, and centralized revenue management can plausibly take a 110-key Holiday Inn Express or Hampton Inn from approximately 28% to 32% labor of revenue down to 22% to 25%, the range Robert Mandelbaum's earlier CBRE work documented for select-service in 2015 ($8,109 per available room, 22.6% of revenue) (10). That is 600 to 1,000 basis points of margin recovered. On a $12M project at 504 terms with 15% special-purpose injection, that translates into roughly +0.15x to +0.25x of stabilized DSCR, net of the technology capex amortized over a seven-year useful life. That is the uplift institutional sponsors should be prepared into the third year of the operating projection, not the first.

4. Asset Class 2: Express Car Washes

Express car wash is the cleanest demonstration of the labor lever in any SBA-financed asset class. Mister Car Wash (NYSE: MCW), until February 18, 2026 the only public pure-play, reported FY2024 revenue of $994.7M across 514 locations year-end, with adjusted EBITDA of $320.9M (32.3% margin) on labor and chemicals combined of 29.2% of revenue (5). Roughly 6,640 employees served 2.124 million Unlimited Wash Club members representing 74% of wash sales (5). By Q3 2025, the company reported 527 sites, $263.4M of quarterly revenue, a record 32.9% adjusted EBITDA margin, and labor and chemicals at 28.0% of revenue, with UWC membership at approximately 2.20 million, up 6% year-over-year (5). Q1 2025 ran labor and chemicals at 27.3% (5). Mister Car Wash closed FY2025 with 548 locations, $1,051.7M in net revenue, and $345.4M of adjusted EBITDA before announcing on February 18, 2026 a definitive agreement to be taken private by Leonard Green & Partners at $7.00 per share, a $3.1B enterprise value (5). The trajectory is unambiguous. Per the FY2024 10-K disclosure, "Cost of labor and chemicals include labor costs associated with car wash employees, maintenance employees, warehouse employees, and chemicals and associated supplies" (5).

Industry structure is consolidating at exactly the pace required to make the labor argument durable. Per the 2025 State of the Carwash Market, industry consultant Brian Hutchins estimates new tunnel builds peaked at 850 to 900 in 2023 and have settled to roughly 550 per year, plus or minus 100, in 2024 and 2025 (11). The format share of new builds is, in his words, "Well into 90%" express tunnels (11). An International Carwash Association consumer study found that wash club memberships were the fastest-growing service offering, with reported membership counts increasing approximately 43% from 2019 to 2022 (12). The recurring-revenue overlay on the labor-light operating model is what produces the EBITDA margins. The 504 Green Loan structure (water reclaim plus solar canopy capex) layers on top.

The labor risk is concentrated geographically. California's June 19, 2024 PAGA reform (AB 2288 / SB 92) recalibrated default penalties to $100 per employee per pay period, with $200 reserved for cases where a court or the LWDA found a prior unlawful policy in the preceding five years or where conduct is "malicious, fraudulent, or oppressive" (13). The employee share of recovered penalties rose from 25% to 35%, and pre-notice cures cap exposure at 15% (30% post-notice within 60 days) (13). This is, on net, a meaningful improvement for compliant operators. But the December 10, 2024 DIR enforcement action issuing $1.3M in citations against 19 South Bay LA and Orange County car washes affecting 960 workers underscores that California Labor Code 2050-2067 car wash registration is being actively enforced (14) (15). New York is more punitive: NYC Administrative Code Section 20-542 mandates a $150,000 surety bond for non-CBA car washes (reduced to $30,000 for unionized operators), with the bond premium running 1% to 3% of face for strong credit, up to 10% for impaired credit (16). State Senate Bill S415A (2025) codifies and extends the New York Department of Labor's December 2020 administrative elimination of the tip credit for miscellaneous-industry workers including car wash attendants (17).

The implication for SBA underwriting is that the labor-light express tunnel format is not just margin-superior to the labor-heavy full-service or hand-wash format. It is increasingly compliance-superior in California and New York. A produced credit memo on a California or NYC express tunnel should treat the automation premium as a regulatory hedge, not just a margin uplift, and should price the proprietary versus industry-standard stack distinction carefully. Sonny's, DRB, ICS, and PDQ stacks recover at 10% to 20% haircuts. Custom-engineered POS or membership platforms deserve 30% to 60%.

5. Asset Class 3: Self-Storage

Self-storage is the asset class where automation has already been priced in by the public REITs and is now diffusing to single-asset SBA borrowers. Public Storage's Q3 2025 results disclose a 78.5% same-store direct net operating income margin across 2,565 same-store facilities, up 10 basis points year-over-year, with the press release citing "reductions in property payroll and utilities" (18). That is the cleanest single data point in the entire institutional storage universe on the labor lever's terminal value. Extra Space Storage reported a 93.7% same-store ending occupancy across 1,071 same-store properties for FY2024 with $1.234 billion in same-store NOI on the same definitional pool (19). Both operators have rolled out smart-entry stacks at scale.

The 2024 Self-Storage Almanac documents 52,301 facilities and $44.3 billion in industry revenue at a 34.68% operating expense ratio (20). Care is required on occupancy benchmarks. National compilations citing IBISWorld and industry-survey vintages place national average occupancy at 91.6% in 2023, down roughly 200 basis points from 2022 and well below the 95% peak in 2021; Storable's February 2024 data showed stabilized occupancy at 83.99%, and SpareFoot/Storable places Q4 2025 national stabilized occupancy at approximately 77.0% (21). Underwriters quoting "stabilized 91.6%" off marketing decks should reset to the lower current vintage. The relevant point for SBA single-asset paper is that the gap between the institutional 78.5% margin and the typical Mom-and-Pop storage operator at 55% to 60% is almost entirely a labor and remote-management gap.

Janus International's December 2024 disclosure reports "with over 350,000 smart locks installed as of December 2024, Nokē dominates the market" (22). The OpenTech / 3 Mile Storage Management testimonial captures the unit-level economics with unusual clarity. Jim Ross, transitioned in July 2022, on the record: "We're saving $4,000 a month on payroll on average. We're doing just as well, if not better, we're answering the phone seven days a week, 12 hours a day. I wish I would have done this a long time ago" (4). A $48,000 annual payroll reduction at a single facility, with no measurable revenue compression and arguably better customer service coverage, is the definitional case study. On a $3.5M to $5M SBA 504 single-asset deal at all-in 6.18%, that is +0.18x to +0.25x of DSCR. The 504 Green Loan structure, with the $5.5M-per-project ceiling and no aggregate cap (the cap was removed April 30, 2024) (23), provides additional capital stack flexibility for sponsors layering solar, LED, and HVAC retrofits, particularly for sponsors also evaluating a USDA REAP overlay on the renewable energy side.

The risk to manage is not technology adoption but tenant friction in low-density rural markets where demographic resistance to a phone-first rental experience remains real. Underwriters should haircut occupancy assumptions by 200 to 400 basis points in the first 18 months of any conversion-to-unattended deal in markets with median age above 50 and broadband penetration below 75%. After the ramp, the margin profile holds.

6. Asset Class 4: Laundromats

Laundromats are the asset class where the labor lever has already produced regional bifurcation, and where insurance is now the binding constraint on further automation. KioSoft, restating the Coin Laundry Association's 2019 Industry Survey, reports that "32% of laundromats in the Northeast completely unattended and 47% in the western portion of the country being unattended" (24). That is not a forecast. That is the installed base. Industry size figures vary by source. Kentley Insights' 2025 Laundromat Industry Report places the segment at $6.8 billion in 2025 revenue, claiming "consistent 6.9% annual growth over the past three years," a figure that conflicts with IBISWorld's much more conservative read (25). Martin Ray Laundry Systems' compilation of industry statistics cites 18,375 U.S. coin laundries, $6.8 billion in nationwide gross annual revenue, and an approximately 95% five-year survival rate; IBISWorld's March 2026 Laundromats in the US (NAICS 81231) report sees the industry at $7.2 billion in 2026 at a 1.6% five-year CAGR, with 17,461 establishments (25). The two data sets disagree on growth rate. They agree on rough industry size and the directional decline in establishment count.

The unit economics of the unattended model are the cleanest in any SBA-financed asset class because the asset throws off cash through a card system or app while the owner sleeps. CleanCloud, ShinePay, and Hercules CardPay have made the operating model nearly turnkey. The constraint is insurance. PlanetLaundry's published guidance from CLA Insurance is unambiguous: "Nearly all of the standard market carriers (Hartford, Chubb, Travelers, West Bend, etc.) have strict guidelines stating that they insure only fully attended or almost fully attended laundries" (26). The standard-market carriers are contracting on unattended exposure. Operators are increasingly placed in CLA's specialty program or in surplus lines markets, with predictable premium consequences.

The collateral risk is not just the premium. It is the ISO Building and Personal Property Coverage Form CP 00 10's vacancy provision, which by analogy underwriters apply when assessing a fully unattended structure during off-hours. The standard form text, edition CP 00 10 10 12, provides under Loss Conditions, Section 6.b, that if a building has been vacant for more than 60 consecutive days before a loss, the insurer "will not pay for any loss or damage caused by any of the following, even if they are Covered Causes of Loss: (a) Vandalism; (b) Sprinkler leakage, unless you have protected the system against freezing; (c) Building glass breakage; (d) Water damage; (e) Theft; or (f) Attempted theft," and "with respect to Covered Causes of Loss other than those listed in b.(1)(a) through b.(1)(f) above, we will reduce the amount we would otherwise pay for the loss or damage by 15%" (27). A laundromat is not a vacant building under the strict ISO definition, but the analogy informs how surplus-lines underwriters think about a structure that is empty of staff for 16 hours a day. Sponsors and lenders should price this carefully.

The DSCR uplift on a fully unattended laundromat versus an attended laundromat at the same revenue is approximately 8 to 12 percentage points of margin, before accounting for incremental insurance cost. After insurance, the net DSCR uplift on a $1.5M to $3M SBA 7(a) laundromat deal at Prime plus 2.5% is in the +0.10x to +0.20x range. The deals worth doing are the ones where the surplus-lines premium plus the deductible exposure is documented up front.

7. Asset Class 5: Unattended Fueling and Convenience Stores

Fueling and c-store is the asset class where the labor lever has been disguised by foodservice growth. NACS State of the Industry data is precise on year-tagging. The 2024 figures (released April 2025): 152,396 c-stores; total industry sales $837.4 billion; in-store sales $335.5 billion (a 22nd consecutive record year); foodservice 28.7% of in-store sales and 39.6% of in-store gross profit (2). The 2025 figures (released April 2026 at the State of the Industry Summit in Schaumburg, April 14-16, 2026): 2.75 million industry jobs; store-level associates averaging $15.04 per hour; foodservice and merchandise combined at $341.2 billion; foodservice 28.5% of in-store sales and 38.9% of in-store gross profit (2). Wages and benefits remain the single largest direct store operating expense, year on year (2). For sponsors evaluating site-level USDA B&I eligibility on rural fueling deals, this cost line drives the underwriting math more than fuel margin does.

The story embedded in those numbers is that the c-store industry is becoming a quick-service restaurant that happens to sell fuel, and QSR labor profiles are not labor-light. The operators that are winning are decoupling the foodservice piece (where labor is the product) from the fueling and merchandise piece (where labor is overhead). Unattended or thinly-attended fueling, where the pump and the convenience purchase are handled by automated payment with no cashier on premises during overnight hours, is the model the industry is testing in markets where regulation permits.

Oregon's House Bill 2426, signed by Governor Tina Kotek in late July 2023, allows nonrural counties to designate up to 50% of pumps as self-serve during operating hours, with rural counties unrestricted (28). Vitor Melo, in Cato Research Brief No. 315, found that "the price of gas falls by 4.4 cents per gallon on average" as a result of the 2018 partial repeal of Oregon's self-service ban, with Melo's analysis suggesting the urban-Oregon and New Jersey effect would be larger if those bans were lifted (29). New Jersey, the last full-service mandate state, employs roughly 10,000 workers in the Auto and Watercraft Service Attendant occupational category across more than 1,900 gas stations as of 2025 (30). Those workers are the embedded cost the rest of the country has already eliminated.

The collateral risk on unattended fueling is real but bounded. Per the FBI's published guidance on payment-card skimming, "It is estimated that skimming costs financial institutions and consumers more than $1 billion each year," with fuel pump skimmers a primary attack vector (31). EMV-compliant dispensers, tamper-evident security seals, and Bluetooth detection have closed much of the exposure, and well-managed unattended fueling sites carry skimming losses well under 50 basis points of revenue. For SBA 7(a) and USDA B&I sponsors developing rural or quasi-rural unattended truck stops or pay-at-the-pump-only fueling stations, the DSCR uplift versus a manned site at the same fuel volume is approximately +0.15x to +0.30x net of EMV capex and chargeback reserves. USDA B&I's 1.20x stabilized and 1.10x first-year DSCR thresholds are achievable on these structures where staffed-only equivalents now miss.

8. The Cross-Cutting Lender Lens: SBA Eligibility, Insurance, Collateral Risk

The single most important regulatory development for sponsors leaning into automation is SOP 50 10 8, effective June 1, 2025, issued via Information Notice 5000-866746 dated April 22, 2025 and updated by technical-corrections Notice 5000-868665 dated May 29, 2025 (23). The SOP closes a series of gaps that had allowed creative third-party-management structures to drift into territory that 13 CFR 120.110(c) prohibits (32). The cited rule's verbatim text bars assistance to "Passive businesses owned by developers and landlords that do not actively use or occupy the assets acquired or improved with the loan proceeds (except Eligible Passive Companies under § 120.111)" (32). The active operating business test under 13 CFR 120.10 still governs (32).

Where SOP 50 10 8 is most directly relevant to automated SPA operators is the four-prong "meaningful oversight" test that governs when a third-party-management arrangement satisfies the active-operating-business standard. The four operative criteria, paraphrased (the exact SOP text governs in any closing), are:

• The Applicant must approve the annual operating budget.

• The Applicant must approve capital and operating expenditures above a significant threshold.

• The Applicant must control the bank accounts.

• The Applicant must supervise the on-site employees, who must be employees of the Applicant rather than the third-party manager.

The fourth prong is where automation creates the most friction. A laundromat with one part-time attendant on the Applicant's payroll, supplemented by a remote management contractor, generally satisfies the test. A laundromat with zero employees, where remote operations are entirely outsourced to a CleanCloud-style platform contractor, generally does not. A self-storage facility that runs on Janus Nokē with one Applicant-employed area manager covering three sites can satisfy the test. A fully kiosk-only storage facility with no Applicant employees on payroll at any of the three sites cannot. SBA Preferred Lenders' chief credit officers should be prepared to underwrite at least one Applicant-employed FTE per location for SBA-financed unattended assets, even where the operating model genuinely does not require it.

Equity injection rules under SOP 50 10 8 retain the 10% standard for 7(a), 15% for special-purpose, and up to 20% for the new-business-plus-special-purpose combination (23). Most 504 special-purpose deals price at 15% injection. The 504 Green Loan structure, with $5.5M per project and no aggregate cap since April 30, 2024 (23), is the most efficient capital stack vehicle for sponsors layering solar, LED, water reclaim, and high-efficiency HVAC into a special-purpose project, and the math is most favorable for express car washes (water reclaim plus solar canopy) and self-storage (LED plus solar plus high-efficiency HVAC for climate-controlled units). Maximum 7(a) spreads remain Prime plus 3.0% on loans above $350K, but most quality SPA paper still prices at Prime plus 1.5% to 2.75% in the current market.

Insurance is the single largest non-rate cross-cutting cost shock in 2024 and 2025. Hospitality insurance premiums were up 17.4% year-over-year in 2024, continuing a multi-year double-digit pace (1). Standard-market carriers are contracting on unattended laundromats. Surplus-lines markets are absorbing the displaced exposure at premiums two to four times the standard-market level. ISO CP 00 10 vacancy clauses are being applied by analogy to fully unattended structures (27). Sponsors and lenders need to price insurance into year-one and stabilized projections at materially higher levels than the trailing five-year average suggests.

Collateral risk on the technology stack itself is the under-discussed element of automated-SPA underwriting. The recovery value of equipment and fixtures running on industry-standard, multi-vendor software stacks (CleanCloud, OpenTech, PTI, Janus Nokē, Sonny's) is roughly 80% to 90% of fair market value at liquidation, because a successor operator can step in without forklifting the platform. The recovery value on proprietary or custom-engineered stacks is 40% to 70%, because successor operators must rebuild integrations or replace systems. Lender minimum DSCR thresholds should reflect this:

• 7(a) standard SPA: 1.20x to 1.25x stabilized

• Conservative SPA on proprietary tech stacks: 1.30x to 1.35x stabilized

• USDA B&I: 1.20x stabilized, 1.10x first-year

The Sonder collapse offers the cleanest cautionary data point on proprietary-stack risk. The licensing agreement with Marriott was terminated November 7, 2025; Sonder filed Chapter 7 the following day (7). Marriott activated emergency measures to relocate guests, and per court filings disclosed in mid-November bankruptcy proceedings, Sonder's outstanding indebtedness to Marriott ran into the millions (33). The integration risk between Sonder's proprietary check-in and operations stack and Marriott's central reservation system, repeatedly raised by analysts at deal announcement, materialized exactly as predicted. SBA-financed sponsors marketing themselves as "the Sonder model" should be priced as Sonder, not as Marriott.

The asset classes excluded from this report are excluded for principled reasons. Memory care and assisted living: labor is the product, automation produces regulatory and clinical risk that exceeds any margin gain. Full-service hospitality: F&B labor is the product. Independent full-service restaurants: same. The labor lever applies where the customer does not interact with the labor as part of the experience. Where the customer interacts with labor as part of the experience, automation is a different conversation entirely.

9. Implications for Lenders and Sponsors

For SBA Preferred Lenders, the immediate task is to recalibrate credit memos on the five asset classes covered here to reflect labor as a separately tracked DSCR sensitivity rather than a residual operating expense line. The institutional benchmarks documented above (Public Storage's 78.5% same-store margin, Mister Car Wash's 32.9% Q3 2025 EBITDA margin, citizenM's select-service economics) are the right reference points for stabilized-year projections, not aspirational ceilings. A sponsor projecting margins below those institutional benchmarks at year three is either operating at sub-scale or running a labor-heavy model that is now structurally disadvantaged.

For USDA B&I and SBA 504 sponsors, the 504 Green Loan path remains under-utilized and is now uncapped at the project level beyond $5.5M. Sponsors layering automation capex with energy-efficiency capex into a single 504 Green stack are achieving effective blended rates that approach 504's headline note rate while preserving cash for working capital and ramp.

For sponsors who are tempted to drive their FTE count to zero, the SOP 50 10 8 four-prong test is the binding constraint. One Applicant-employed FTE per location, supervised by Applicant management, with control of bank accounts and budget approval retained at the Applicant level, is the minimum viable structure. Anything below that is an EPC issue or a passive-business issue that will not survive SBA review.

MMCG Invest, LLC delivers third-party feasibility studies and market studies for SBA 7(a), SBA 504, USDA B&I, USDA REAP, USDA Community Facilities, and conventional financing on every asset class covered in this report. Engagements begin at a $4,900 minimum. The firm's lead reviewer holds a J.D. and is a Practicing Affiliate of the Appraisal Institute. For credit officers and sponsors evaluating an automated special-purpose asset under current SBA capital-stack pricing, request a scoping call before the LOI, not after.

Evaluating a development or acquisition that requires defensible absorption assumptions? Reach out to discuss how our methodology supports your lending decision.

Michal Mohelsky, J.D. | Principal | mmcginvest.com 

Contact: michal@mmcginvest.com

Phone: (628) 225-1125

Disclaimer: This report is provided for informational purposes only and does not constitute investment advice. Data presented herein is derived from proprietary MMCG databases and third-party sources believed to be reliable; however, MMCG Invest makes no representation as to the accuracy or completeness of such information. Figures from third-party industry databases have been independently verified and, where appropriate, adjusted to reflect MMCG's proprietary analytical methodology. Past performance is not indicative of future results.

Citations

(1) CBRE, Trends® in the Hotel Industry, March 2024 release (2,456-property sample, 2023 data) and March 2025 release (2024 data including 4.8% labor expense growth on 2.3% revenue growth and 17.4% YoY insurance premium increase).

(2) NACS, State of the Industry annual report, 2024 data (released April 2025) and 2025 data (released at the NACS State of the Industry Summit, April 14-16, 2026, Renaissance Schaumburg Convention Center Hotel, Schaumburg, IL).

(3) Bay Colony Development Corporation, posted 25-year debenture pricing tables, April 2026; SomerCor April 2026 504 debenture pricing (4.59% note rate; effective all-in 6.0% to 6.2% inclusive of SBA, CDC, and central servicing-agent fees).

(4) OpenTech Alliance, "3 Mile Storage Management Saves $4K Per Month in Payroll with Remote Manager," published case study, citing Jim Ross transition to Live! Remote Manager in July 2022.

(5) Mister Car Wash, Inc. (NYSE: MCW): Form 10-K for FY2024 (filed February 21, 2025); Q1 2025 earnings call transcript; Q3 2025 earnings release (October 29, 2025); FY2025 full-year earnings release (February 18, 2026); take-private announcement (February 18, 2026, Leonard Green & Partners, $7.00 per share, $3.1B enterprise value).

(6) STR / CoStar U.S. hotel performance data, year-end 2024 (occupancy 63.0%, ADR $158.67, RevPAR $99.94).

(7) Marriott International, Inc., investor press releases: August 19, 2024 (Sonder long-term licensing agreement); April 28, 2025 (citizenM acquisition announcement, $355M, 36 hotels at signing); July 22, 2025 (citizenM closing, 37 hotels, 8,789 rooms); November 9, 2025 (termination of agreement with Sonder).

(8) Sonder Holdings, Inc., FY2024 financial release (revenue $621.3M, Q4 RevPAR $180, 9,900 Live Units, cost of revenue ex-D&A $377.2M); November 2025 Chapter 7 filings.

(9) Francis Davidson, Sonder co-founder and CEO, Skift interview, as cited in Operto, "How Sonder Operates," 2022.

(10) Robert Mandelbaum, CBRE Hotels' Americas Research, 2016 Trends® in the Hotel Industry (233-property same-store sample, 2010-2015), reporting 2015 select-service labor at 22.6% of revenue ($8,109 per available room).

(11) Carwash.com, 2025 State of the Carwash Market, citing industry consultant Brian Hutchins on new tunnel build cadence and express format share of new builds.

(12) International Carwash Association consumer study, as compiled and reported by JBS Industries, citing approximately 43% growth in wash club memberships from 2019 to 2022.

(13) California PAGA reform statutes AB 2288 and SB 92 (effective June 19, 2024); Cooley LLP and Morgan Lewis published analyses of penalty structure, employee share, and cure-cap mechanics.

(14) California Department of Industrial Relations press release 2024-102 (December 10, 2024): $1.3M in citations against 19 South Bay LA and Orange County car washes affecting 960 workers.

(15) California Labor Code Sections 2050-2067 (Car Wash Worker Law), Division of Labor Standards Enforcement registration program.

(16) New York City Administrative Code Section 20-542 (Car Wash Accountability Act); Surety One, Inc., and SuretyBonds.com published market quotations on bond premium rates.

(17) New York Senate Bill S415A (2025), codifying and extending NYDOL administrative elimination of tip credit for miscellaneous-industry workers including car wash attendants (effective December 31, 2020 administratively).

(18) Public Storage, Inc., Form 8-K, Q3 2025 (October 29, 2025): 2,565 same-store facilities, 78.5% same-store gross margin, +10 bps YoY, with attribution to "reductions in property payroll and utilities."

(19) Extra Space Storage, Inc., Q4 2024 8-K and FY2024 supplemental: 1,071 same-store properties, 93.7% same-store ending occupancy, $1.234B same-store NOI.

(20) Modern Storage Media in partnership with Newmark, 2024 Self-Storage Almanac: 52,301 facilities, $44.3B industry revenue, 34.68% national operating expense ratio.

(21) Storable, Storage Monitor (February 2024 stabilized occupancy 83.99%); SpareFoot/Storable national stabilized occupancy Q4 2025 (~77.0%); Neighbor.com industry statistics compilation citing IBISWorld.

(22) Janus International, Nokē smart-lock installed-base disclosure, December 2024 ("with over 350,000 smart locks installed"); Rural Builder magazine, 2024 industry coverage.

(23) U.S. Small Business Administration: Procedural Notice 5000-856984 (effective April 30, 2024, removing 504 Green Energy Public Policy aggregate cap); Information Notice 5000-866746 (April 22, 2025, announcing SOP 50 10 8); Information Notice 5000-868665 (May 29, 2025, technical corrections); SOP 50 10 8 (effective June 1, 2025).

(24) KioSoft, "Exploring the Benefits of Laundry Cards in Modern Laundromats," restating Coin Laundry Association 2019 Industry Survey.

(25) Kentley Insights, 2025 Laundromat Industry Report; Martin Ray Laundry Systems industry statistics compilation; IBISWorld, Laundromats in the US (NAICS 81231), March 2026 report.

(26) PlanetLaundry, "Are You Covered?" published guidance authored on behalf of CLA Insurance.

(27) Insurance Services Office (ISO), Building and Personal Property Coverage Form CP 00 10 (edition 10 12), Loss Conditions Section 6.b, vacancy provisions.

(28) Oregon House Bill 2426 (signed July 2023, Governor Tina Kotek), allowing nonrural counties to designate up to 50% of pumps as self-serve.

(29) Vitor Melo, "Self-Service Bans and Gasoline Prices: The Effect of Allowing Consumers to Pump Their Own Gas," Cato Institute Research Brief in Economic Policy No. 315, January 11, 2023.

(30) Popular Science, tabulation of New Jersey Department of Labor Auto and Watercraft Service Attendant occupational data (more than 1,900 gas stations and approximately 10,000 workers, 2025).

(31) Federal Bureau of Investigation, public guidance on payment-card skimming: "It is estimated that skimming costs financial institutions and consumers more than $1 billion each year."

(32) 13 CFR 120.10 (active operating business definition); 13 CFR 120.110(c) (passive business prohibition); 13 CFR 120.111 (Eligible Passive Company conditions).

(33) Hotel Dive coverage of mid-November 2025 court filings detailing Marriott / Sonder integration termination and outstanding indebtedness.