Restaurant Feasibility Study in Connecticut

Connecticut's top SBA class, financed in small loans

Full-service restaurants are the single largest class in Connecticut's SBA lending, 1 of 39 in Connecticut's own class ranking, yet Connecticut is only 23 of 54 among states for the class. That combination says restaurants matter more to Connecticut's SBA market than Connecticut matters to restaurant lending nationally. SBA approved 413 sit-down restaurant loans here from FY2017 to FY2026, for $135.7 million. The typical loan is small: at $150,000, the median is 0.55x the class median across the nation, and half of the loans range between $50,000 and $350,000. A location quotient of 1.02x shows the class at almost exactly its national weight.

Franchise concepts are rare, at 3.9% of loans, so these are mostly owner-run restaurants rather than chain units. SBA 7(a) carried 379 loans and SBA 504 carried 34. Santander Bank, National Association holds 76 loans for $20.0 million and Manufacturers and Traders Trust Company 57 for $7.5 million, while Liberty Bank holds 41 for $5.6 million, KeyBank National Association 21 for $2.0 million and TD Bank, National Association 26 that total only $990,600, very small loans. New England Certified Development Corporation holds 18 of the 504 loans, for $13.7 million, and Community Investment Corporation 14, for $9.3 million.

What the floors say about Connecticut dining

The cancellation floor is 14.3% for approvals dated FY2017 to FY2024; counting loans not yet funded, the ceiling is 16.1%. Charge-offs among the 161 loans paid out from FY2017 to FY2021 reach 5.6% so far and 3.7% inside five years. Both are floors. Lending fell to 21 loans and $8.3 million in FY2020, reached 50 loans in both FY2024 and FY2025, the latter worth $23.7 million, and eased to 41 loans and $10.3 million in FY2026.

Building the case for a Connecticut restaurant

The area field in SBA's files uses area names, so Capitol with 74 loans and South Central with 52 sit beside Hartford with 46, Western with 42 and Fairfield with 41; the study should define its own trade area rather than rely on those labels. Demand comes from the households and daytime workers within reach, the dining competition on the same corridor, and seasonal swings where they apply. Cost covers the kitchen, dining room, liquor license where one is needed, and working capital through the opening months. The coverage test has to use realistic covers per night and food and labor costs from the operator's own history. If the loan buys the building, the appraisal must consider how easily it could be re-let to another restaurant.