Coffee Shop Feasibility Study in California

California leads every state in coffee shop and snack bar lending under SBA, ranking 1 of 53 with 1,043 approvals and $375.7 million from FY2017 to FY2026. On loan size it looks like the nation: the median of $250,000 sits at 1.04x the national figure for the class; meanwhile the location quotient, 0.99x, shows the class holding almost exactly its national share of California's SBA lending. The measure that sets the cell apart is cancellation. At least 14.5% of FY2017 to FY2024 approvals were cancelled after approval, and the ceiling is 15.9%; that floor is higher than both the California all-class rate and the national coffee shop rate by more than our margin.

Why approved coffee loans fail to fund

A high cancellation rate in a franchise-heavy class can trace to the steps between approval and opening: the lease, the landlord's work letter, the franchisor's site approval and the permit queue. Franchise units are 41.3% of California's coffee loans, so many borrowers are working to a brand's timetable as well as the lender's. Once open, the class carries real operating risk too. The charge-off floor is 6.6% across 377 loans disbursed in FY2017 to FY2021, and 4.5% were written off within five years.

Leasehold loans and their holders

Half of California's coffee loans fall between $100,000 and $450,000, and SBA 7(a) carries 1,001 of the approvals against 42 under SBA 504, so these are leasehold and equipment loans far more than property loans. U.S. Bank, National Association holds 91, The Huntington National Bank 80, and Bank of Hope 67 worth $29.8 million, the largest dollar total among the leading holders. CDC Small Business Finance Corp. holds 48 7(a) loans and also appears among the 504 lenders. Holdings are as SBA shows them now, not as originated. Volume has climbed from 48 approvals in FY2021 to 154 in FY2025 and 128 in FY2026. The class rank inside California is 10 of 39.

What a California coffee study must prove before approval

Because cancellation is the distinctive risk, the study should be built to survive the period after approval: a signed or near-final lease, a construction budget priced from bids and a realistic opening date. Demand testing must look at the specific corner, since Los Angeles County alone has 310 approvals and Orange and San Diego counties add 124 and 114, which makes saturation a site question rather than a statewide one. Debt service coverage should be run on ticket count and average check by daypart, stressed for a slower first year. The appraisal is rarely about real estate here; for a franchise resale it is about the price paid for the business. No coding caveat attaches to coffee shops and snack bars.