Coffee Shop Feasibility Study in Pennsylvania

Pennsylvania coffee: high volume, rising fast

Pennsylvania is one of the larger coffee markets in SBA's files. Between FY2017 and FY2026 it approved 273 coffee shop and snack bar loans worth $73.9 million, which ranks Pennsylvania 8 of 53 among states and places the class 8 of 39 among Pennsylvania classes. The location quotient of 1.01x is almost exactly national, and the median loan of $174,000, at 0.72x the national class median, does not clear our screen's two-sided test. The movement is in recent years: Pennsylvania approved 47 coffee loans worth $13.3 million in FY2024, 53 worth $14.5 million in FY2025 and 32 worth $11.6 million in FY2026, against 13 in each of FY2020 and FY2021.

Almost all 7(a), spread across many banks

SBA 7(a) carries 272 of the approvals and SBA 504 just 1, so Pennsylvania coffee lending is leasehold lending. Its middle half spans $50,000 to $365,000, and franchise units are 36.6% of loans. Manufacturers and Traders Trust Company holds 38 loans for $4.8 million, The Huntington National Bank 32 for $4.7 million, TD Bank, National Association 28 for $2.5 million, KeyBank National Association 20 for $6.7 million and Wilmington Savings Fund Society FSB 15 for $7.4 million. Allegheny County leads with 63 approvals, Philadelphia has 38, Montgomery 24 and Bucks 15.

Losses outrun cancellations

Pennsylvania coffee approvals usually close: cancellations claim at least 8.0% of FY2017 to FY2024 coffee approvals in the state, and 9.0% at the ceiling. More of the risk comes after funding. Across 90 Pennsylvania units that drew funds over FY2017 to FY2021, 6.7% or more are charged off to date, while 2.2% were charged off within five years, so a good part of the loss arrived later. With so many recent approvals still young, the record will keep moving.

The surge in recent approvals is a reason for care rather than comfort, because these young Pennsylvania loans have yet to pass through the stretch in which the FY2017 to FY2021 group took its losses. A feasibility study for a Pennsylvania coffee shop should measure demand at the exact location: foot traffic, commuter and office patterns, parking or drive-through access and the cafes already serving it. Cost should be a contractor's price for the build-out and equipment, not an allowance. Debt service coverage should be tested well past the opening period, with sales flat and wages rising, and with royalties included for franchise units. For an acquisition, the appraisal values the going concern, and the study should anchor it in verified revenue.

No coding caveat applies to coffee shops here. These Pennsylvania figures cover SBA loans alone, follow the borrower's industry code and give floors, not final rates.