Coffee Shop Feasibility Study in Kentucky

Small loans, franchise heavy

Kentucky coffee shop and snack bar lending is small and often franchised. From FY2017 to FY2026 SBA approved 76 of them, worth $23.6 million, with a median of $200,000 that is 0.83x the national class median. The middle half of loans runs from $73,750 to $352,500. Franchises account for 56.6% of the cell, which means brand systems shape the borrower profile. The state ranks 29 of 53 for the class, coffee shops rank 6 of 39 among Kentucky asset classes, and the location quotient of 1.19x shows a modestly higher weight than nationally. On cancellation, the metric we can print, the cell is not distinct from both its state and the national class.

Programs and lenders

Almost everything runs through 7(a): 75 loans against a single 504 loan. The Huntington National Bank is the leading lender with 15 loans and $2.8 million, an average ticket near the median. First Commonwealth Bank, Community Trust Bank, Inc. and Stock Yards Bank & Trust Company each hold 7, at $1.4 million, $1.4 million and $1.3 million, while Republic Bank & Trust Company holds 5 and $1.1 million. Jefferson County leads the geography with 18 loans, Fayette has 9 and Boone 8, with Boyd and Kenton at 6 each, so a handful of counties supply much of the record.

Trend and outcomes

Lending was thin through the early part of the window, at 3 loans in each of FY2020 and FY2021, and then rose to 14 loans and $8.5 million in FY2024 and 15 loans and $5.5 million in FY2026. Cancellation after approval ran at a minimum of 7.5% for FY2017 to FY2024 vintages, and the ceiling is the same 7.5%. Charge-offs cannot be quoted for this cell, because its cohort has fewer than 30 loans; no figure is given; that silence is not evidence of a clean record.

What the study has to test

A coffee shop is a traffic business, so a Kentucky study has to measure foot and vehicle counts, morning commuter patterns, drive through access if planned, and the competing cafes and chains in the trade area. Because so many borrowers are franchisees, the study should reconcile the franchisor's projected sales with local reality and include royalties and marketing fees in the cost base. Build out and equipment cost must fit a ticket near $200,000, leaving working capital for the first months. Coverage ought to be run at a cautious daily ticket count with a sluggish first year. The appraisal of a leased space rests mostly on equipment and business value, so the lender needs the cash flow case to hold without relying on collateral.