SBA loans for driving schools, bartending schools and other specialty instruction

What falls in this code, and what its figures say

NAICS 611699 is the catch-all for instruction that has no code of its own: driving schools, CPR and first-aid training, bartending schools, survival training, public-speaking and personal-development courses, and a long tail of other non-degree instruction. Language schools have their own code, and so do the neighbors with pages here: exam preparation and tutoring, fine arts schools, sports and recreation instruction and technical and trade schools.

The median loan of $150,000 lands exactly on a line in SBA's rules. SBA guarantees 85% of 7(a) loans of $150,000 or less and 75% above that, so a lender taking a chance on a new school has more of its exposure covered at or below that amount. Pricing follows size as well: SBA caps variable rates at the base rate plus 6% from $50,001 to $250,000, and plus 3% above $350,000. The caps leave more room to price small loans high than large ones, and the 30 acquisition loans, at a median of $345,750, priced at a median of 9.5%, below the code-wide 10.43%. See current SBA loan rates and SBA maximum interest rates.

Prepaid tuition is owed, not earned

Many schools in this code are paid before they teach. A driving school sells a package of lessons, a bartending school bills the full course at enrollment, a certification course takes a deposit weeks before the first session. That cash sits in the bank, but until the instruction is delivered it is owed to students, and a lender reads it that way. On an accrual balance sheet it appears as deferred revenue. On cash-basis books it often does not appear at all, and the school looks richer than it is.

Take a school holding 400 in the bank against 300 of lessons already paid for and not yet taught. Its honest cash position is 100. A buyer who takes over that school takes over the duty to teach those 300 of lessons, which is why purchase agreements in education usually adjust the price for prepaid tuition, or have the seller hand over the cash that goes with it. See the working capital peg and cash vs accrual financials for lenders.

Prepayment also flatters a growing school and hides a shrinking one. When enrollment falls, cash drops faster than revenue, because fewer new students are paying ahead. Lenders therefore ask for enrollment by month or by term, not just annual revenue, and read it against the refund policy: a school that must refund unused lessons on demand carries more risk than one whose terms become non-refundable after a start date.

Show the lender what students have paid for and not yet received. A file that leaves it out gets found out in underwriting.

Start-ups and franchises: lending on the operator

Start-ups took 26.7% of loans in this code and franchises 18.6%. A new school has no earnings history to measure debt service coverage against, so the lender leans on the projection, the operator and the equity. SBA requires an equity injection of at least 10% of total project costs for a start-up, and every owner of 20% or more personally guarantees the loan. The owner's resume matters more here than in most industries. It supports the management-experience questions on SBA Form 1919, and a lender wants to see that the person opening a driving school has taught driving, or run a school, before.

Franchises help and cost. A franchisor brings a curriculum, a brand and often a site-selection model; the lender also inherits the royalties and marketing fees, which come off revenue before debt service. SBA Express accounted for 35.3% of loans. Express loans go up to $500,000 with a 50% guaranty, so they suit smaller openings and equipment purchases more than a full build-out. See SBA 7(a) vs SBA Express and franchise resale financing.

Buying an established school

Thirty loans, 11.6% of the total, financed a change of ownership, at a median of $345,750 and a median rate of 9.5%. A buyer of an established school is paying for its enrollment pipeline, its instructors, its standing in local search and referrals, and the licenses and contracts that come with it: a driving school's state approval and fleet, a CPR or safety-training company's contracts with employers.

Most of that value is goodwill, which SBA will finance, with conditions. Where the amount financed, less appraised real estate and equipment, exceeds $250,000, SBA requires an independent business valuation, and the loan for the purchase cannot exceed it. The buyer puts in at least 10% of total project costs; a seller note counts for up to half of that only if it is on full standby for the life of the loan. SBA prohibits an earnout to the seller, so a price cannot be tied to next year's enrollment. The seller may consult for up to 12 months after closing, or up to 24 months under SOP 50 10 8.1 from 1 October 2026, which matters in a business where the founder often teaches, sells and holds the key relationships. See the SBA valuation requirement, seller notes and full standby and buyer experience requirements.

From 1 October 2026 every change of ownership also needs financial due diligence and must show 1.25x debt service coverage on historical results. For a school that collects tuition in advance, the lender will test whether revenue was recognized as lessons were taught or as cash came in.

Collateral: a thin layer, and sometimes a building

Classrooms are usually leased, curriculum has no resale value, and furniture and computers fetch little. A driving school is the exception, with a fleet of dual-control vehicles that has real if declining value. So most loans in this code are cash-flow loans with a personal guarantee behind them, and where business assets do not fully secure the loan, SBA lenders commonly take a lien on the owners' real estate as well. See SBA personal residence collateral, and for a leased school, lease assignment in an acquisition.

Twenty-one SBA 504 loans went to schools in this code, at a median of $566,000. 504 finances owner-occupied real estate and long-life equipment, typically 50% from a bank, 40% from a CDC and 10% from the borrower, or 15% for a new business. The school must occupy at least 51% of an existing building. See SBA 7(a) vs 504.

Preparing a school's SBA file

Start with the SBA checklist: 2–3 years of business tax returns, a P&L and balance sheet with a year-to-date P&L through last month-end, a debt schedule with copies of any notes being refinanced, and personal tax returns and a personal financial statement for each owner of 20% or more. Bank statements, a use-of-proceeds narrative and the owner's resume are optional on the list, but for a school they carry real weight. An acquisition adds the target's latest full year of figures and the letter of intent. Then add what is particular to instruction:

• Enrollment or lessons sold by month for the last two years, and bookings already taken for the months ahead
• Tuition and package prices, and the refund policy students sign
• A schedule of prepaid tuition and deposits at the latest month-end
• State licenses or approvals, and instructor certifications where the subject requires them
• For a driving school, the vehicle list with year, mileage, lienholder and insurance
• For a franchise, the franchise agreement and, on a resale, the franchisor's consent to transfer
• Revenue by channel: individual students, employers, schools or public programs

SBA requires debt service coverage of at least 1.15x, and 1.0x globally including the owners' personal income and debts. Transparent builds the full lender package — financing model, lender presentation, blind teaser and underwriting memo — in a day once the documents are in, and draws on the 278 SBA 7(a) and 504 lenders in its book. On SBA loans the lender pays Transparent, not the borrower. See global cash flow and how we underwrite.