Liquor Store Feasibility Study in Texas

Texas liquor lending: almost all 7(a), and large

Texas is one of the biggest states for SBA liquor store lending, ranking 7 of 53, with 275 approvals worth $210.4 million from FY2017 to FY2026. Nearly all of it runs through SBA 7(a): 272 loans, against 3 under SBA 504. The Texas median of $492,000 is 1.09x the national liquor median, and the quartiles run from $250,000 to $1.0 million. The Texas median, cancellation floor and charge-off floor are not outliers for this cell. Liquor retail is a smaller share of Texas lending than nationally, with a 0.56x location quotient, and ranks 14 of 39 among Texas classes. Franchise stores are rare, at 1.1%.

Texas lenders and deal flow

Metro City Bank holds 17 Texas liquor loans worth $29.4 million, the largest dollar book, followed by Celtic Bank Corporation with 15 worth $13.6 million. The Huntington National Bank, Wells Fargo Bank National Association and Fifth Third Bank hold 11 each. Approvals were 14 in FY2020 and reached 41 worth $28.8 million in FY2024, the busiest year, then 30 in FY2025 and 29 in FY2026.

The Texas closing record is good. Only 8.3% of FY2017 to FY2024 approvals at the floor, and 8.8% at the ceiling, were cancelled. Losses are higher. Of 108 Texas liquor loans disbursed during FY2017 to FY2021, 5.6% have been charged off so far, and 3.7% failed within five years, so Texas losses have come both early and late. Both rates are floors.

What a Texas liquor store study must prove

The Texas book is concentrated in a few counties. Dallas holds 49 approvals, Tarrant 39, Harris 32, Collin 25, and Denton and Travis 18 each. A Texas study needs the population and spending of the trade area, the package stores and grocery competitors around the site, and any local rules on where and how spirits can be sold. For an acquisition, it must verify sales by category, inventory and the transferability of the permit. Cost should cover build-out, coolers, security and opening inventory at current pricing. The coverage test should be run on margins the store can document, with the late losses in mind, at loans that reach $1.0 million at the upper quartile. If the Texas loan buys the building, its appraisal should value the property apart from the business and permit.