Grocery Store Feasibility Study in Colorado

A small share of a big state's lending

Colorado grocers rarely come to SBA. The file records 30 grocery approvals from FY2017 to FY2026, totalling $23.1 million, and the location quotient is 0.28x: grocery makes up well under a third of the share of Colorado approvals that it holds nationally. The state sits 28 of 55 for the class, and grocery sits 23 of 39 among Colorado's asset classes. Those ranks are middling, and the quotient explains why: the sample is small, so a single large store can move a year's total, as the $5.3 million of FY2026 against $0 in FY2020 shows.

Loan size and structure

What the Colorado record has in common with the nation is the ticket. A median of $332,750 is 0.95x the national median for grocery, which means a Colorado store is financed at close to the size of a store anywhere else. The spread is wide, though. The middle half of loans runs from $106,800 to $1.1 million, so the same class holds a corner market buying equipment and a larger store carrying real estate. Of the 30, 29 were SBA 7(a) loans and the remainder was one SBA 504 loan, and none involved a franchise, at 0.00% of loans. A borrower should read that as an independent operator's market, with no franchisor underwriting standing behind the application.

Lenders and geography

In the 7(a) listing the leading name is The Huntington National Bank, at 5 loans. The name tells a reader who holds or held the paper in SBA files; it does not describe the bank's appetite or terms. Arapahoe County leads with 10 loans, Adams and Denver follow with 6 each, and El Paso has 3, so the lending clusters along the Front Range metro belt rather than in rural counties. Approvals were busiest in FY2023, at 7 loans and $4.9 million.

Rates we cannot print

Colorado grocery has no published cancellation or charge-off percentage, as the loan counts behind each are too low to defend. A lender should treat that gap as unknown rather than as nil. Grocery is coded under the borrower's own industry, so a project that mixes a food hall, a pharmacy counter or a specialty market may be filed elsewhere.

What a Colorado grocery study has to test

Begin with the trade area: households within a realistic drive, the competing stores already there and the share a new entrant could win. Build cost and equipment, notably refrigeration, should be set against a loan in the neighbourhood of the median, and the study should show how the project fares if it needs the upper reach of the range instead. Debt service coverage has to hold on thin grocery margins and a slow first year, and the appraisal must rest on a sales forecast the valuer can defend.