SBA 7(a) Coffee Shop Feasibility Study in Minnesota

A more franchised, higher-ticket cafe record

Minnesota's coffee shop and snack bar loans differ from the other states' in how many carry a brand. SBA's 7(a) files record 139 such loans from FY2017 to FY2026, worth $53.1 million in gross dollars, and 27.3% of them are franchised. The median loan is $150,000, or 0.67x what the class borrows elsewhere, and the middle half is bracketed by $50,000 and $492,500; that upper end is a lot higher than the median would suggest, so a few large deals pull the range wide. The state ranks 18 for this program and class by loan count, and the class holds 9 of 39 inside Minnesota.

Three names and a metro core

Three holders make up the lender table. U.S. Bank, National Association holds 17 loans but a mere $615,000 in gross dollars, The Huntington National Bank has 11, worth $2.6 million, and Sunrise Banks National Association holds 8 for $1.4 million. They are the holders in SBA's data today, not a ranking of who originated the most. Hennepin County accounts for 36 loans, Anoka 14, Stearns 11, Dakota 8 and Washington 7, so the Twin Cities area and a few regional centers carry the class. Approvals were slow early, at 6 loans in FY2017, and picked up to 22 in FY2022 and 25 in FY2024, and FY2026 shows 14 loans worth $10.2 million.

Where these loans have gone wrong

Of the cafe loans approved between FY2017 and FY2024, 12.5% or more were cancelled, with a ceiling of 14.3% if undisbursed loans are counted as cancelled, so the gap suggests some approvals were still waiting to fund. Minnesota's cafe cohort of 41 loans, funded across FY2017 to FY2021, shows a charge-off floor of 4.9% to date, the same 4.9% inside five years. With only 41 loans behind them, the numbers are minimums on loans some of which are still open. They describe the class and are not a verdict on any borrower or bank.

Testing a Minnesota coffee concept

Winter shapes the study. Traffic and sales for a drive-through or a walk-in cafe both need to be measured through the cold months, and the model should show how a seasonal dip hits coverage of the payment. The wide gap between a median of $150,000 and a top quarter reaching past $492,500 says there are two businesses here: a lean independent and a larger build with equipment or real estate. The study should say which one is proposed and size cost accordingly. A franchised cafe has royalties, supply terms and site rules to model, which an independent does not. Competitors at the same intersection, parking, and the share of customers who arrive by car deserve a count. The appraisal question is whether any real property in the plan would stand on its own if the cafe closed. The record gives no coding limit for the cell.