Liquor Store Feasibility Study in the Denver-Aurora-Centennial, CO Metro Area

A class this area lends to more than four times the national rate

The Denver-Aurora-Centennial area has a location quotient of 4.44x for liquor store loans: the class is more than four times as large a slice of local SBA loans as it is of loans nationally. It ranks 3 of 426 areas for the class and liquor stores take first place among the 39 classes measured in the area. SBA approved 435 store loans worth $329.4 million between FY2017 and FY2026. Arapahoe County has 111 of them, Jefferson County 107, Denver County 90, Adams County 85 and Douglas County 31.

These are large loans for the class. The median is $550,000, which is 1.22x the national figure, while the inner half of loans stretches from $351,000 to $926,000. Franchise share is 0.00%: SBA's file shows no franchise flag on any loan in this cell. SBA 7(a) carries 428 of the loans and SBA 504 carries 7.

A book concentrated with one holder

SBA's lender table names whoever holds each loan now. Hanmi Bank is listed on 250 of the 7(a) loans, worth $191.9 million, a book far bigger than the other four named holders combined. Bank of Hope follows with 35 worth $24.1 million, VelocitySBA, LLC with 10 worth $6.3 million, PromiseOne Bank with 9 worth $7.0 million and U.S. Bank, National Association, also 9, worth $2.1 million. A borrower should read that as a pattern of where these loans ended up, not as a view of what any holder looks for in a request.

The outcome floors are modest. Approvals that never reached the borrower ran to at least 8.1% for FY2017 to FY2024, and the ceiling that also counts undisbursed loans comes out identical at 8.1%. In the cohort of 211 Denver-area loans disbursed during FY2017 to FY2021, no fewer than 2.4% have been written off. Nothing is printed for losses within five years of approval, since Loan Analytics withholds a share resting on so few loans; the blank is not a zero. Approvals moved from 55 in FY2017 to 33 in FY2019, up to 60 in FY2025 worth $48.2 million.

What a liquor study in this area must test

Licensing is the first gate: a study should establish what the local authority allows for a new or transferred license and how near existing stores the site may sit. Demand must come from households inside a realistic driving trade area, the competing stores including grocery and big-box sellers, and the product mix between beer, wine and spirits. Inventory is a large working-capital item, so cash flow should test the cost of stocking before the first sale. The appraisal of a store that is sold as a going concern turns on the license and inventory, which need separate valuation from the real estate. The metro boundary follows county lines as of July 2023, so an Adams or Douglas County loan whose county was not matched is absent, and the totals are minimums.