SBA 7(a) Coffee Shop Feasibility Study in Indiana

A small-ticket class with franchise weight

Coffee shops and snack bars are among the smaller financings in SBA 7(a) records, and Indiana's are smaller still. The median loan of $179,650 is only 0.80x the national 7(a) figure for coffee shops, and the middle half runs from $50,150 to $420,000. From FY2017 to FY2026 SBA approved 154 such loans in the state, worth $56.1 million in gross dollars. Indiana ranks 16 among states for the program's loans to this class, and coffee shops and snack bars place 7 of 39 among Indiana's asset classes.

Franchise-affiliated borrowers account for 44.8% of these loans, so close to half the record is branded units, and a study for an independent shop should say how it differs. The Huntington National Bank is the clear lender in SBA's records, holding 35 loans worth $7.1 million, with a second bank holding 18 worth $1.6 million. Three more banks hold 6 each: The State Bank and Trust Company with $2.7 million, Old National Bank with $1.5 million, and Lake City Bank with $935,800. These are loans SBA lists the lender as holding; the figures are silent on borrower requirements. Marion County has 19 loans, Hamilton 16, Johnson 13, Lake 11 and Allen 9.

A rise after a quiet stretch

Approvals ran at 16 in FY2017 and FY2018 and dropped to 6 in FY2021, then climbed to 22 in FY2022 and 24 in FY2023, the year of the largest dollar total at $16.1 million. FY2026 shows 17 loans worth $10.5 million. A study should note that the recent record is not the early one, and that the loans behind many recent approvals have had little time to season.

Indiana coffee shop approvals made through FY2024 saw cancellation of at least 13.8%, rising to 16.3% when approvals still awaiting disbursement are counted, and that cancellation floor is the highest-looking figure on the page. The 51 loans in the early Indiana cohort show a charge-off floor of 2.0% so far, while the five-year measure is 0.00%. Treat them as minimums, since open loans may yet fail, and a cohort this small means a single loan moves the rates.

What an Indiana coffee shop study has to test

A feasibility study here has to test the site more than the building: morning traffic counts at the curb, access for drive-through lanes if the concept needs them, and the density of competing cafes and chains within the trade area. Because loans are modest, equipment and fit-out cost dominate the budget, which is why a study ought to itemise what is leasehold improvement and what is movable, since that decides what a lender can take as collateral and what an appraiser can value. Coverage of the payment should rest on realistic ticket counts and average spend, with a slower first year beside the base case, and the study should say whether the project is branded or independent.