Grocery Store Feasibility Study in Illinois

Illinois grocers: a high charge-off floor

The figure that marks out Illinois grocery lending is how many funded loans have gone bad. Of the 68 grocery loans disbursed by SBA lenders in the state over FY2017 to FY2021, at least 13.2% have been charged off, and 4.4% inside the first five years. Measured against grocery nationally, that floor is higher by more than the distinctness margin we apply, and it stands apart as well from Illinois's charge-off record across all classes. The rest of the cell is less unusual. The state approved 174 grocery loans in FY2017 to FY2026, worth $161.3 million, which ranks Illinois 7 of 55; a location quotient of 1.18x gives grocers a slightly heavier place in its lending than nationally, and they rank 12 of 39 among its classes. The median loan, $460,000, is 1.31x the national grocery median, a gap our screen does not count as distinctive.

Cook County, and lenders that differ

Cook County dominates with 99 approvals, far ahead of Lake with 14 and DuPage with 13. SBA 7(a) carried 154 loans and SBA 504 carried 20, led by Small Business Growth Corporation with 13 worth $22.6 million and SomerCor 504, Inc. with 6. The largest 7(a) holders lend very differently: The Huntington National Bank holds 36 loans worth $6.8 million, mostly small, while Byline Bank holds 31 worth $53.6 million, far larger store financings. U.S. Bank, National Association has 8. The middle half of approvals runs from $122,000 to $1.4 million, and franchise share is 5.2%, so these are overwhelmingly independent grocers. Annual approvals stayed between 12 and 22, with FY2021's 21 loans carrying $22.4 million.

Cancellations

Approvals also fall through at a rate close to the national grocery figure: at least 12.9% of the FY2017 to FY2024 Illinois cohort was cancelled, or 15.0% counting undisbursed loans as cancelled.

Most of those charge-offs arrived after the fifth year, which suggests Illinois grocery credits have tended to weaken over time rather than fail at opening. A feasibility study for an Illinois grocery store therefore has to test durability, not just launch. Demand should be measured as household spending within the trade area and the share the store can hold against chains, discounters, dollar stores and ethnic specialists nearby, with a view on new competition. Cost covers fixtures, refrigeration, inventory and any building work, and the coverage of debt service has to be shown on thin grocery margins in a mature year, with refrigeration replacement and wage pressure included. If an Illinois grocer is buying its building, an appraiser will look at a retail box that another tenant may or may not want, and the study's forecast must back that value without assuming the grocer's sales will hold indefinitely.

Illinois's loss and cancellation rates are minimums; loans still on the books can push them up. Lender names follow SBA's record of who holds each loan now.