Liquor Store Feasibility Study in Georgia

Liquor store loans at property scale

A liquor store loan in Georgia is a large loan. The median is $1.7 million, 3.69x the liquor store median nationally, and half of Georgia approvals ran from $700,000 to $3.3 million. That median is what separates this cell from Georgia's overall SBA lending and from liquor store lending nationally. Georgia approved 467 liquor store loans worth $977.7 million in FY2017 through FY2026, placing Georgia 4 of 53 states; Georgia's location quotient for liquor stores is 2.38x, and the class ranks 6 of 39 within Georgia.

Loans of that size are buying more than inventory and shelving. They point to purchases of the store with its building, possibly a retail property with other tenants, although the files record the borrower's industry rather than the property type, so that reading should be tested deal by deal. Almost none of these are franchises, at 0.43% of loans.

Metro City Bank dominates

Metro City Bank is the current holder of 169 of these loans, worth $501.0 million. The next lenders are far smaller: First Community Bank with 18, Commonwealth Business Bank with 14, and PromiseOne Bank and The Huntington National Bank with 12 each. SBA 7(a) carried 435 approvals and SBA 504 only 32, led by Florida Business Development Corporation with 12 and Capital Partners Certified Development Company with 10 worth $20.8 million. For a Georgia borrower, the concentration means Metro City Bank's view of the class carries much of the market; for a competing lender, it means a well-tested credit with few rivals in the file.

Georgia liquor loans have performed after funding. For the 212 Georgia liquor loans disbursed FY2017 through FY2021, the charge-off rate is no lower than 1.9% to date, with 0.00% before year five. Cancellation removed at least 11.9% of the state's liquor store approvals from FY2017 to FY2024, with 12.9% as the ceiling. Approvals peaked at 73 in FY2021, worth $173.7 million, and were 31 in FY2026.

What a Georgia liquor store study must test

At a median of $1.7 million, the study is as much a real estate appraisal as a retail forecast. Demand has to be measured as sales potential at the site against nearby package stores, and any local licensing limits should be confirmed for the county or city. Fulton, DeKalb, Cobb and Gwinnett counties hold 74, 52, 38 and 31 of the approvals. Cost must separate land, building, inventory and any business value. Debt service coverage has to come from store margins, with any rental income shown separately, and the appraisal must show what the real estate is worth if the license or the store fails.