SBA 7(a) Coffee Shop Feasibility Study in Iowa

Iowa's coffee counters: small loans, two busy counties

Coffee shops and snack bars in Iowa borrowed modestly under 7(a), and the pattern is more local than the state's size suggests. The record holds 57 approvals over the ten fiscal years with $16.7 million in gross dollars. A median of $165,600 sits at 0.74x the nationwide figure for the class, so an Iowa shop typically borrows about three quarters of what its national peer does. Half the loans fall between $91,500 and $340,000. Franchising accounts for 31.6% of loans, a notable share, which means a feasibility reader should expect many of these projects to carry franchisor standards. The state ranks 35 for coffee loans by number, whereas the class holds a spot of 7 of 39 in Iowa's own mix. No metric is flagged as distinctive against both parents, so the cell is best read as a normal coffee market in a state where small counters are a steady part of SBA lending.

Linn and Polk lead

Linn County records 13 loans and Polk 12, far ahead of Johnson with 4, Black Hawk and Scott with 3 each, and a tail of counties with 2. Farmers State Bank is listed with 6 loans and $1.3 million. The Huntington National Bank shows 5 loans but $4.0 million, a sizeable total on a handful of loans, and Cedar Rapids Bank and Trust Company 5 loans worth $830,000. Each line is SBA's record of the institution that holds or held the loans now, not an account of how it lends. Yearly approvals reached 11 in both FY2022 and FY2023, with $4.9 million and $2.3 million, but fell to 2 loans and $1.3 million in FY2024 and to 2 loans and $600,000 in FY2026. The FY2020 count was a single loan of $48,000.

Of approvals dated FY2017 to FY2024, at least 7.7% were cancelled; the ceiling matches, because no undisbursed loans change the count. The charge-off rate does not appear for this cell. Too few of its loans had funded and aged to support one, and a missing rate should never be taken as proof of a clean record.

Testing an Iowa coffee shop

Proceeds usually go to counter equipment, fitting out leased space, or buying a shop already trading, and a study starts by naming which. Traffic is the variable that matters most: counts at the site, the morning commute pattern, college or hospital draw, and the drive-through question. The study should model transactions per day and average ticket from comparable shops rather than quoting a sales figure, then set labour, cost of goods and occupancy against it. Because the median loan is small, a lender will want coverage to hold even if the first year opens soft, so the model needs a slow ramp. Franchise projects should state the royalty and the required remodel cycle; independent shops should show how they will build a customer base without a brand. Appraisal of a leased shop rests on the business, so the study should link the forecast to the lease length.