SBA 7(a) Coffee Shop Feasibility Study in Hawaii

Tiny loans, a leading class

Hawaii's coffee shops and snack bars borrow remarkably little. The median loan is $50,000, only 0.22x the nationwide 7(a) level, and the middle half spans $25,000 through $125,000. SBA approved 43 loans from FY2017 to FY2026 totalling $7.4 million. Yet the class holds 3 of 39 places among Hawaii's asset classes, so these micro-loans matter to the islands' small-business lending even though the state is 38 among states by number of loans. Franchise affiliation is 2.3%, so nearly everything is independent.

Honolulu, the banks, and the other islands

Honolulu County has 32 loans, Maui 5, and Hawaii and Kauai 3 each, so the Oahu market dominates. Central Pacific Bank holds 27 of the loans, with only $1.9 million, and First Hawaiian Bank holds 8 with $662,400. Together they hold nearly everything in the list, according to SBA's present-holder data, and this is a description of holdings and not lending policy. With a few thousand dollars of average loan, lenders are essentially offering equipment and working capital to cafe owners, not buildings.

A year of change

The record is sparse and then jumps. FY2020 and FY2021 show 1 loan each, at $25,000 and $50,000. FY2023 shows 5 loans and $3.5 million, which is large relative to the rest and implies a handful of bigger loans among the small ones. FY2024 is the busiest year, with 11 loans and $1.6 million, and FY2025 has 6 loans and $420,000. FY2026 shows 0 loans and $0. Cancellation of approvals through FY2024 stood at a floor of 5.4%, with the ceiling identical at 5.4%. No loss figure is printed, since not enough older loans funded to support one; the blank is not zero.

What a Hawaii cafe study should test

The study should be candid that a loan of this size is tied to a lease and an equipment list. Foot traffic, tourist and resident mix, and the lease cost per square foot in Honolulu or a neighbour island town set the revenue ceiling. Supply costs, including imported goods and local coffee, matter in the margin, as do wages and taxes and fees the operator must pay. Seasonality of visitor arrivals should be reflected in monthly cash flow. A lender will also ask for the operator's experience and for a conservative sales case that still covers the payment. Because the dollars are small, a lean study that shows each assumption clearly is more useful than a long one.