SBA 7(a) Coffee Shop Feasibility Study in North Carolina

Charge-offs are the story

North Carolina coffee shops and snack bars took 218 SBA 7(a) loans worth $83.2 million from FY2017 to FY2026. Brands cover 52.8% of the loans, and the median of $297,500 is 1.32x the 7(a) median elsewhere for the class, with the central half running $120,000 to $485,225. But the figure that defines the cell is loss. Of 79 loans in the FY2017 to FY2021 cohort, 10.1% have been charged off to date and 8.9% within five years of approval, so the five-year measure captures most of what has been lost to date.

Rank and cancellations

Among North Carolina classes this one is seventh by rank, 7 of 39, and the state is 12 for the program. Cancellation reached 10.3% minimum for approvals dated FY2017 to FY2024, and 11.0% with undisbursed loans counted. Both are floors. The cohort is small, so a few loans move the charge-off percentages, but the level should give any lender pause.

Lenders and counties

The Huntington National Bank holds 30 loans and $8.1 million. Next, Wells Fargo Bank National Association carries 12 loans yet only $1.3 million, while Carolina Small Business Development Fund has 11 for $2.4 million, TowneBank 10 for $8.0 million and Citizens Bank 10 for $4.6 million. TowneBank's dollars per loan are much higher than the others. SBA reports current holders, so these are books. Wake County has 52 loans and Mecklenburg 38, then Durham 13 and Buncombe 10.

Recent growth

FY2025 brought 41 loans and $24.0 million, the largest year in the series, and FY2026 shows 22 loans. That recent bulge is too young to show charge-offs.

Testing a North Carolina coffee shop

Look first at the site's traffic and parking, competing cafes and chains, the lease, and how many cups a day the owner needs to sell to cover wages, rent and loan payments. With the charge-off pattern as it is, coverage should be shown under a slow opening year and a rise in competition. Franchised concepts should include royalty and advertising costs, and the appraisal should recognise that most of the value is equipment and goodwill, so the owner's guarantee and the lease term carry real weight in the credit.