SBA 7(a) Coffee Shop Feasibility Study in Kentucky

Kentucky coffee shops: small loans, franchise-heavy, one withheld rate

Kentucky coffee shops and snack bars account for 75 loans and $23.4 million in the 7(a) program for FY2017 to FY2026. The class stands 5 of 39 in Kentucky even though the state is only 28 among states. Franchise brands are on 56.0% of loans, so a franchisor's template shapes most of the cell. The typical loan, $200,000, is 0.89x of the nationwide reading, and the central loans span $72,500 to $355,000. The early-cohort loss rate is held back in Kentucky because too few loans qualify; it is neither zero nor a measured figure.

Names and counties on the list

The Huntington National Bank is listed against 15 loans worth $2.8 million. Three institutions hold 7 apiece: First Commonwealth Bank ($1.4 million), Community Trust Bank, Inc. ($1.4 million) and Stock Yards Bank & Trust Company ($1.3 million). Republic Bank & Trust Company holds 5 worth $1.1 million. The sums per loan are uniformly small. These are present holders on SBA's books, no comment on anyone's practices. Jefferson County, which includes Louisville, has 18 loans, Fayette County 9, Boone 8, and Boyd and Kenton 6 each. Yearly counts began at 9 loans and $1.4 million in FY2018, dipped to 2 loans worth $189,600 in FY2021, then climbed: 14 loans, $8.5 million in FY2024, and 15 loans, $5.5 million in FY2026.

Cancellation

Through FY2024, 7.7% or more of approvals fell away before becoming loans in force, and the broader reading stays at 7.7%. Because the recent years carry so much of the volume, the record says little about how the newest loans will perform.

A Kentucky coffee study should count drive-through and cafe competitors along the corridor, show morning traffic at the site and describe the daypart mix. When a franchise is involved, the study should read the franchisor's disclosure document against local sales, wage and rent levels, and place royalties and marketing fees in the budget. Small loans suggest compact formats, such as a kiosk or a small cafe, and the study should be specific on build-out and equipment. Coverage should be shown on a weaker first year, and the lease term against the equipment's life is important. Louisville, Lexington and northern Kentucky behave differently from smaller markets, and the demand case must reflect that. The appraisal will focus on leasehold improvements and equipment. Approval is not implied.