Coffee Shop Feasibility Study in New York

A smaller corner of New York lending

Coffee shops and snack bars draw a thinner slice of New York SBA credit than they draw nationally. The location quotient is 0.72x, coffee and snack bars place 12 of 39 among New York classes by count, while New York is 5 of 53 among states for the class on 366 loans and $90.9 million from FY2017 to FY2026. Ticket sizes are modest. The median is $100,000, 0.42x the national median, and half the loans fall from $35,000 to $275,000. Nothing in the headline figures marks the cell as unusual, so the picture below describes an ordinary cell.

Nearly all of this is 7(a) money: 360 loans against 6 under SBA 504. TD Bank, National Association leads with 77 loans and $4.1 million, Manufacturers and Traders Trust Company 39 for $4.6 million, KeyBank National Association 21 for $3.8 million and JPMorgan Chase Bank, National Association 20 for $3.1 million. Newtek Bank, National Association holds 21 loans for $12.5 million, the larger tickets in this market. Franchise brands carry 19.1% of loans, so most borrowers are independents.

Charge-offs that come after year five

The loss record has a late pattern. Of the 108 loans disbursed from FY2017 to FY2021, 8.3% have been charged off to date, yet only 1.9% within five years of approval. Most of that cohort's losses came after the first five years, so a borrower should test the plan over the full loan term, not only the first stretch of payments. Cancellation after approval is 14.8% for loans approved FY2017 through FY2024; the ceiling is the same 14.8% because no loan from that period is still waiting to disburse. Volume rose from 17 loans in FY2020 to 62 loans and $23.1 million in FY2025 and 61 loans and $20.0 million in FY2026.

What the study for a New York cafe must show

A coffee shop study here should start with foot traffic. New York County with 68 loans and Kings with 63 lead the lending, followed by Queens with 32 and Suffolk with 29, and in each the demand test should count people passing the door, nearby offices and transit, and every competing cafe and chain within a short walk. Cost means the lease, espresso and refrigeration equipment and the build-out. Debt service coverage depends on average ticket and transactions per hour, tested against a downside with a higher rent at lease renewal. With 360 of the 366 loans under 7(a), the appraisal question is usually the value of the business itself, so the study should give the appraiser a supportable cash flow.