Liquor Store Feasibility Study in Rhode Island

Twice the weight, a lot less per loan

Rhode Island liquor retail is a concentrated, small-ticket niche, and two measures set it apart. The 2.01x location quotient says liquor stores take about twice the share of Rhode Island approvals that they do nationally, placing the class at 4 of 39 in Rhode Island, and the median loan of $282,000 is only 0.63x the national median for the class. Statewide, the class stands 20 of 53 in the national table, built from 61 approvals and $33.1 million across FY2017 to FY2026. Median size is the distinctive metric here: liquor in Rhode Island is common, but each loan is modest next to those made in the rest of the country.

Lenders, programs and geography

Rhode Island leans on 504 more than most liquor markets do, with 15 loans there against 46 under 7(a), which fits stores that own the building they sell from. Franchises are absent, and the central band of loans runs from $120,000 to $747,000. Eastern Bank leads the 7(a) list with 13 loans totaling $6.3 million, and Rockland Trust Company follows with 5 loans for $3.8 million. Two certified development companies split the 504 lending evenly: New England Certified Development Corporation holds 6 loans for $3.5 million, and Bay Colony Development Corporation holds 6 for $2.7 million. Providence County dominates with 41 loans, while Kent and Washington counties have 7 each and Newport County 6. Annual counts moved between 4 loans in FY2017 and 9 in FY2018, FY2022 and FY2025, with FY2023 posting $7.9 million.

Cancellation reaches 7.8% at minimum for the FY2017 to FY2024 approvals, with 7.8% also as the ceiling, a low figure. The charge-off rate is withheld for Rhode Island, since the cohort of loans that funded in the early years is under 30. Do not read the withheld figure as zero losses: it marks a sample too small to be fair to a borrower or a lender.

Testing a Missouri clinic

A Rhode Island liquor store study should prove demand in a dense, small state where the next competing store may be a short drive away. It should separate Providence from the shoreline and Newport markets, check state licensing and any distance limits between sellers, and state the margin after product cost. Because the median is low and 504 is common, the study should say whether the project buys real estate or leases, and test the purchase against a typical loan near $282,000. Debt service coverage should hold on lower sales than the base case, and the appraiser will price the building and the license-dependent business separately, so the study should document sales history and the license position.