Coffee Shop Feasibility Study in Michigan

Michigan sits almost exactly on the national pattern for coffee shop and snack bar lending: the location quotient is 1.01x. The state approved 312 SBA loans to the class from FY2017 to FY2026, for $81.0 million, good for 6 of 53 among states; inside Michigan the class stands 7 of 39. Neither the median nor the outcome floors lie far from Michigan's all-class figures or from the national class, so the useful reading here is about who borrows and who holds the loans.

A franchise heavy market with one main bank

Franchise borrowers are 47.8% of Michigan's coffee and snack loans, which makes brand choice a central question for any project. The median loan is $160,000, or 0.67x the national median for coffee and snack lending, with the middle half running from $50,000 to $342,750. The book is nearly all 7(a): 305 loans against 7 under 504. The Huntington National Bank holds 141 loans for $23.2 million, a commanding position, while Fifth Third Bank (10 loans, $5.4 million), Capitol National Bank (8), ChoiceOne Bank (7) and Newtek Bank, National Association (7 loans, $940,000) trail well behind. Oakland County leads with 72 loans, then Wayne (40), Kent (21) and Washtenaw (12). Dollars have grown even as counts moved in a narrow band: $4.8 million across 30 loans in FY2017, $14.5 million across 44 in FY2024, and $7.2 million across 27 in FY2026.

Early losses and a light cancellation rate

Cancellation after approval is 9.6% of FY2017 to FY2024 approvals, or 12.4% counting loans not yet disbursed. The charge-off record runs the other way. Of 122 loans disbursed in FY2017 to FY2021, 5.7% have been charged off to date, and 4.1% did so before year five, so most failures arrived early.

What a Michigan coffee shop study should test

We would start with the franchise question, since so many of these loans carry a brand: the study should compare the franchisor's unit economics with a local independent concept and say which the trade area supports. Demand depends on traffic counts, morning access and whether a drive through lane is possible on the site. Cost must separate build out, equipment and opening inventory. Because most losses here came in the early years, debt service coverage has to hold through the opening years of sales, not a mature store. The appraisal will mostly cover leasehold improvements and equipment, so the lender will lean on cash flow and guarantees.

Each loan's industry is the code its borrower reported.