Liquor Store Feasibility Study in Tennessee

A pure 7(a) retail class

Every one of the 46 Tennessee liquor store loans approved from FY2017 to FY2026 sits under SBA 7(a); none is a 504 loan, shown as 0. Together they come to $25.6 million. That fits a business that buys an existing store or inventory and leases the shop. The median loan is $408,200, about 0.91x the nationwide level, with the bulk between $204,550 to $781,750. The location quotient is 0.67x, so liquor stores are a thinner part of Tennessee approvals than nationally. The class is 13 of 39 within the state and Tennessee ranks 25 of 53. The franchise flag appears on 4.3% of loans.

Lenders and the Memphis concentration

U.S. Bank, National Association holds 10 loans worth $3.9 million and The Huntington National Bank holds 8 worth $3.3 million, so both large banks write smaller notes here. Shelby County dominates with 14 loans, ahead of Davidson and Knox at 4 each, and Jefferson and Sullivan at 3. Memphis therefore accounts for a larger share than Nashville, which is not what a population map would suggest. Retail liquor rules differ across Tennessee, with licences tied to the owner and the location, and that may help explain the pattern.

Outcomes we can report

Tennessee liquor store cancellations stand at a 12.9% floor, and the same once undisbursed loans are added. That share of approved borrowers saw the deal fall through, frequently because a licence or lease could not be transferred in time. The loss rate is held back: the funded FY2017 to FY2021 pool is under 30 loans, and absent is not zero. Package stores are usually steady earners, but an owner who relies on one location faces concentrated risk.

What the study must test

A Tennessee liquor store study should start with the licence: whether it can be obtained or transferred, how long that takes and what the local rules allow within distance of schools or churches. It should size the trade area and competing stores, estimate gross margin from the product mix, and test rent against sales. Payment coverage needs a cautious first-year sales case, and the appraisal usually centres on inventory, goodwill and the lease. Lenders should insist on seeing these items. The figures above show what peers borrowed.