Liquor Store Feasibility Study in New Jersey

New Jersey liquor stores: large loans and a cancellation floor

New Jersey's liquor store lending differs from both the rest of the state's SBA lending and the class nationally on two measures, loan size and cancellation. The median loan is $742,500, which is 1.65x the national median for liquor stores, and half of the loans fall between $300,000 and $1.3 million. Of the loans approved from FY2017 to FY2024, 18.1% were cancelled after approval, and 18.8% counting loans still undisbursed; that cancellation floor is one of the two measures that set the cell apart. The class is unusually important here. Its location quotient is 2.10x and liquor stores are 3 of 39 in New Jersey's class ranking, while New Jersey is 5 of 53 among states, with 460 loans and $452.2 million from FY2017 to FY2026.

Almost all of it is 7(a) credit, with 448 loans against 12 under SBA 504, the largest 504 lender being Trenton Business Assistance Corporation with 7 loans and $7.3 million. Fulton Bank, National Association holds 75 loans for $116.2 million, Peapack Private Bank and Trust 45 for $46.5 million, Provident Bank 36 for $42.3 million and Wilmington Savings Fund Society FSB 19 for $23.6 million, while TD Bank, National Association holds 49 smaller loans for $18.0 million. Franchise brands are rare, at 1.7% of loans.

Losses are thin once a deal funds

After funding, these loans have performed well: of the 210 loans paid out from FY2017 to FY2021, 0.48% were charged off, both to date and within five years. So the New Jersey risk sits almost entirely before closing. A cancelled approval, for borrower and lender alike, is money that was never disbursed. Lending peaked at 68 loans and $65.3 million in FY2021 and has been lower since, with 30 loans and $31.6 million in FY2026.

Testing a New Jersey liquor store purchase

Bergen with 59 loans, Middlesex with 52, Camden with 49, Hudson with 38 and Mercer with 30 lead the lending, and in each the study should map the competing package stores and supermarkets selling alcohol within the customer's normal trip. Demand rests on the store's sales history, verified against tax filings and supplier records rather than the seller's statements. Cost includes the purchase price split among inventory, equipment, any real estate and the intangible value of the license. Coverage of debt service must be tested on the gross margin the store actually earns. The appraisal matters, so the study should support the license and goodwill value with market evidence.