Liquor Store Feasibility Study in the Providence-Warwick, RI-MA Metro Area

A New England market tilted toward liquor stores

Providence-Warwick has a location quotient of 1.81x for liquor store loans, so stores are a notably larger part of local SBA lending than of national lending. The area is fifteenth of 426 for the class and liquor stores are third of 39 locally. SBA approved 79 loans worth $40.3 million from FY2017 to FY2026. Loans are modest: a $271,000 median, only 0.60x the national figure, with central loans between $102,000 and $683,500. The franchise share is 0.00%, so every store is independent.

Sixty-three loans are SBA 7(a) and 16 are SBA 504, so about one in five finances property. Providence County has 41 of the loans, Bristol County, MA 18, Kent County and Washington County 7 each, and Newport County 6.

Banks and a development company

Eastern Bank leads 7(a) with 18 loans ($6.7 million); Rockland Trust Company has 11 ($7.5 million), larger on average; Santander Bank, National Association has 5 ($978,000). Among 504 holders only Bay Colony Development Corporation reaches the list, at 7 loans and $3.0 million. SBA records present holders, so the lists say where loans sit and nothing about a lender's wishes.

Cancellations came to 9.1% or more of approvals from FY2017 through FY2024, with an identical ceiling. SBA releases no charge-off rate to date for this cell, nor the loans and dollars of FY2025 and FY2026, so those cells are blank rather than zero. The years that remain run from 5 loans in FY2017 to 12 in FY2018 and again in FY2022, worth $6.8 million, and 6 in FY2024.

What a Providence-area liquor store study must test

The license is the asset to check first. Rhode Island and Massachusetts regulate package stores differently, and the study has to show that the license is available or transferable at the site, together with any limits on distance and hours. Demand then rests on the households and commuters near the store, the other package stores and the supermarkets or warehouse sellers that may compete in the same product lines. Inventory is a heavy working-capital item, so cash flow must fund stock before sales begin. Some buyers evidently own the building, as the 504 loans show, and then the appraisal should price the real estate apart from license and inventory. Counts for Rhode Island and Bristol County leave out loans with a county absent from the July 2023 list.