Grocery Store Feasibility Study in Minnesota

Minnesota grocers: few loans, modest tickets

Minnesota grocery stores took 87 SBA approvals worth $49.7 million from FY2017 to FY2026, which ranks the state 15 of 55 for the class and places grocery 15 of 39 among Minnesota's own classes. A location quotient of 0.74x means Minnesota grocers hold a thinner slice of the state's guaranteed lending than grocers hold nationally. The Minnesota grocery median, $230,000, is 0.65x the national class median; our screen sets that against the state's all-class record too and does not flag the cell.

Independent stores and a handful of lenders

No Minnesota grocery loan went to a franchise, 0.00%, so these are independent stores. Their middle half spans $50,000 to $513,000, wide enough to include both inventory lines and store purchases with property. SBA 7(a) carries 68 approvals and SBA 504 carries 19. U.S. Bank, National Association holds 12 loans but for only $1.0 million, while Sunrise Banks National Association holds 6 for $2.1 million. On the development company side, Twin Cities-Metro Certified Development Company and Amplio Economic Development Corporation hold 5 apiece, worth $9.3 million and $2.6 million. Hennepin County has 27 approvals and Ramsey 19, far ahead of Dakota at 7 and Anoka at 6.

Outcomes since FY2017

Minnesota grocers have not cost their lenders money so far: the 31 stores funded in FY2017 to FY2021 show 0.00% charged off, to date and inside five years, and with a cohort this small that record is fragile. Cancellation is the outcome that shows. At least 12.0% of the FY2017 to FY2024 grocery approvals were cancelled, and 14.7% if loans still undrawn are counted. Annual volume has moved from 2 approvals worth $443,000 in FY2017 to 12 worth $10.3 million in FY2021 and 16 in FY2023.

A grocery store study in Minnesota has to work at the level of the neighbourhood. Demand means the households within walking or short driving distance, what they spend on groceries, and the supermarkets, discounters and convenience stores already capturing it. Cost includes refrigeration, shelving, point-of-sale systems and any building work, priced from vendors, along with opening inventory. Debt service coverage depends on thin margins, so the study should model gross margin, shrink and labour carefully and stress a drop in sales after a competitor opens. Where the loan buys the building, the appraisal should value it as general retail space, which is often the steadier collateral story for a lender.

These Minnesota figures count only SBA-guaranteed loans, classed by the borrower's reported industry, and the lenders shown are today's holders as SBA lists them; every rate is a floor.