Liquor Store Feasibility Study in Maryland

Maryland's liquor stores: a leading class

Maryland finances liquor stores through SBA far out of proportion to the national pattern. Liquor stores rank 3 of 39 among Maryland classes by loan count. The Maryland location quotient is 2.08x, so the class holds a far larger share of the state's SBA approvals than of the national total. Maryland ranks 11 of 53 states, with 219 approvals worth $166.8 million from FY2017 to FY2026. The Maryland median was $520,000, 1.16x the class median nationwide; Maryland's middle half stretches from $250,000 to $955,500. Our screen finds nothing distinct in Maryland's median or either outcome rate when each is set against both the Maryland all-asset record and liquor stores nationally; the cell's mark is concentration.

Almost every Maryland deal uses 7(a): 218 approvals against 1 under SBA 504, and franchising does not appear at 0.00%. These loans mostly buy independent stores and their licenses, inventory and goodwill rather than buildings. A handful of lenders carries the market. Hanmi Bank holds 53 Maryland liquor loans worth $60.3 million, the largest book by far. Manufacturers and Traders Trust Company holds 40, but worth only $5.4 million, so its loans are small; PCB Bank holds 22 worth $14.0 million, and Open Bank and PromiseOne Bank 11 each. Baltimore City leads with 64 approvals, Baltimore County has 38 and Prince George's 33, ahead of Montgomery with 19 and Anne Arundel with 15. FY2021 was the peak, with 32 loans for $34.6 million.

How Maryland liquor loans have performed

At least 13.8% of Maryland's FY2017 to FY2024 liquor approvals were cancelled, and the ceiling stays at 13.8% because no Maryland approval from those years is still awaiting funds. In a store purchase, a cancellation often traces to the license transfer, the lease assignment or a seller's books that did not hold up. Losses have been modest: among the 102 Maryland liquor loans disbursed in FY2017 to FY2021, 2.9% are charged off so far and 2.0% within the first five years, so a small part of the losses came later. Each rate is a floor.

What a Maryland liquor store study must test

A study for a Maryland store has to confirm what the buyer is paying for. Demand means sales at this location, checked against tax filings and supplier invoices, the neighbourhood's households and spending, and nearby stores competing for the same customers, which in Baltimore City or Prince George's can be many within a short walk or drive. Cost testing covers the purchase price, inventory at cost and any renovation. For Maryland coverage of debt service, the study should use verified gross margin, with a loan near $955,500 tested more severely than one at the $520,000 median. The appraisal will be a business valuation, since the license and goodwill carry most of the value, and the lender will want the license transfer approved before closing.