SBA 7(a) Coffee Shop Feasibility Study in Georgia

Georgia coffee shops: franchised and oversized

Coffee shops and snack bars are the eighth-ranked class in Georgia, and under 7(a) the state places 9 among states, with 258 approvals from FY2017 to FY2026 worth $118.0 million. Two figures define the cell. Franchised units make up 58.9% of loans, while a median of $350,000 sits at 1.56x the nationwide 7(a) benchmark, a large premium for a business that can open in a modest space. Typical approvals span $156,075 to $539,925, so even the smaller loans in the state are substantial.

Concentrated holders

The lead holder is The Huntington National Bank (40 loans, $14.4 million). Behind it stand Newtek Bank, National Association (17, $3.6 million), United Community Bank (14, $10.6 million), Wells Fargo Bank National Association (13, $898,700) and Newtek Small Business Finance, LLC (10, $4.3 million). The Wells Fargo average is strikingly small, and two separate Newtek entities appear in the table. SBA records the current or former holder, nothing about its standards. Fulton County has 41 loans, Gwinnett 33, Cobb and DeKalb 25 each, Chatham 12, Cherokee, Fayette and Forsyth 8 each, Richmond 7 and Henry 6.

Floors from a small cohort

Cancellation after approval reaches at least 8.9% through FY2024, or 9.6% with undisbursed loans counted. The charge-off cohort is just 67 loans, within which at least 6.0% are charged off so far and 3.0% were lost inside five years. A handful of failures would move these numbers, so read them as rough floors. Georgia is not short of precedent in the county table, with Fulton, Gwinnett, Cobb and DeKalb carrying most of the volume, but a shop in Chatham, Richmond or Henry will find only a few comparable loans.

Testing a Georgia coffee concept

Walk-by or drive-by traffic, morning commuter counts and the pull of nearby offices and campuses decide sales, so a study should measure them for the exact site. It should test average ticket and transactions per hour against labor, rent and franchise royalties, and set the build-out with espresso equipment and any drive-through lane against a ticket near $350,000. Franchise disclosure documents should be read for required investment and territory, and the study should state the inventory, permit and opening-labor costs the loan must also cover. Coverage must hold if sales ramp slowly, including a stretch of months when the shop sells well under its target volume. An appraiser values the going concern and, separately, any building owned.