SBA 504 Coffee Shop Feasibility Study

Coffee shop 504 loans run large

Coffee shop owners took 375 SBA 504 loans from FY2017 to FY2026, for $186.6 million. The cell's distinctive measure is its median loan of $415,000, which our screen separates from both of its parents: it towers over coffee shop lending in both programs combined, which is mostly small 7(a) credit, and it also departs from the 504 norm. The middle half runs from $254,500 to $629,500, a tight range that fits a single pad building with a drive-through lane better than a café inside a strip center.

Franchises make up 41.6% of these loans, and that shapes the deal: the franchisor's site approval, prototype and unit sales history set much of the underwriting. B:Side Capital leads the CDCs with 31 loans and $20.4 million, Granite State Economic Development Corporation has 30 and $11.7 million, Capital Certified Development Corporation 20 and $11.0 million, Florida First Capital Finance Corporation, Inc. 16 and $7.9 million, and Florida Business Development Corporation 13 and $6.5 million. California leads the states with 42 loans, Texas has 36 and Colorado 30, ahead of Florida with 23. Approvals have grown, from 23 in FY2017 to 54 in both FY2022 and FY2025, and FY2025 brought the top dollar year at $37.1 million.

Many approvals do not fund

Cancellation runs high: 15.9% or more of the coffee loans approved between FY2017 and FY2024 never funded, and the ceiling, with undisbursed loans counted as cancelled, is 21.7%. That fallout is the risk this cell actually shows; the charge-off floor is 0.00% on 121 loans disbursed from FY2017 to FY2021, with 0.00% charged off inside five years. For a borrower, a cancellation often means the deal died between approval and closing: a site that failed its permits, a bid that came in over budget, or an appraisal below cost. A study done before the application is how those problems surface while they can still be fixed.

What a drive-through coffee study must cover

No limitation is attached to this class; the code is the borrower's industry, which says nothing about the building format. A feasibility study for a 504 coffee project should test demand from traffic counts, turning movements and morning peak access, since a site on the wrong side of the commute underperforms; cost for the pad, the queuing lane and the equipment; debt service coverage from a sales forecast built on comparable units and, where a franchise applies, the system's own disclosures; and the appraisal, which has to reconcile a project cost that can exceed what a small drive-through building is worth to a buyer who does not sell coffee.