Liquor Store Feasibility Study in Oregon

The smallest liquor loans in the group

Oregon liquor store lending is small in count and tiny in size. The 0.41x location quotient says liquor carries well under half of its national weight in Oregon, the class sits at 16 of 39 inside the state, and the median loan of $109,850 is only 0.24x the national median for the class. The file shows 42 approvals totaling $10.6 million across FY2017 to FY2026, and the bulk of loans fall from $25,000 to $299,375. Oregon ranks 26 of 53 on volume. The numbers suggest small, independent retailers rather than large operators.

A pure 7(a) market

Every one of the 42 loans came through the 7(a) program, none through 504, and franchising is absent. Columbia Bank leads the lender list with 15 loans totaling $2.8 million, and U.S. Bank, National Association has 7 loans for $495,000, an average that fits inventory and small acquisitions. Marion County has 7 loans, Multnomah and Washington counties 6 each, and Jackson, Lane, Lincoln and Polk counties 3 each. Annual counts run from 2 loans in FY2018 and FY2020 to 8 in FY2017, and in FY2018 the whole year added only $50,000.

One in five approvals did not close. Cancellation reaches 20.0% as a floor, with an identical 20.0% ceiling, which separates Oregon liquor from most small retail classes. Oregon liquor gets no charge-off percentage here; too few early loans funded to support one. Silence on charge-offs should not be read as zero, and lenders should view the cancellation figure as the main warning in this cell.

What the study must test

For an Oregon liquor store, the study should start with the reason loans fail to close. Ownership transfers of an existing store need a license transfer or approval from the state, lease assignment and an inventory valuation, and any of these can stall a closing. The study should state which route the project follows. Demand analysis should count competing outlets within a short drive, local traffic and the income of the customer base in the Willamette Valley or on the coast. Cost should be set against the $109,850 median, and coverage of the loan payment should be run at lower sales than plan. The appraisal of such a small store will rest on cash flow, so the study should document sales and gross margin.