SBA 7(a) Coffee Shop Feasibility Study in Texas

A franchise-heavy program in the second-ranked state

Texas takes a rank of 2 among states for SBA 7(a) coffee shop and snack bar loans, and the class stands 7 of 39 among Texas asset classes. Over FY2017 to FY2026 the program approved 902 loans worth $415.8 million. Two numbers define the cell: franchises at 63.6%, so most borrowers are buying into a brand, and a median loan of $341,000, which is 1.52x the 7(a) median coffee shops reach nationally. The middle half runs from $151,500 to $519,025.

Lenders and the map

The Huntington National Bank is far ahead at 109 loans and $42.8 million; the next group is Frost Bank at 30 and $12.9 million, Citizens Bank at 27 and $13.5 million, Wells Fargo Bank National Association at 27 and $3.9 million, and United Community Bank at 24 and $13.8 million. The dollars per loan differ sharply across that list, a reminder that a tally of loans and a tally of dollars tell different stories. Harris County has 144 loans, Tarrant 80, Collin 69, Dallas 67, Bexar 64 and Denton 63. The page notes SBA reports the holder of each loan today.

The floors are not low

Cancellation of FY2017 to FY2024 approvals was 10.4% at the least, rising to 12.0% once undisbursed loans are included. Looking at 295 loans that disbursed in FY2017 to FY2021, 11.2% are charged off to date, and the figure falls to 7.1% when only the first five years after approval are counted. For a class this reliant on franchises, a lender and a borrower should treat these as minimums that will probably climb.

A growing book

Approvals rose from 66 loans and $14.9 million in FY2017 to 140 loans and $77.2 million in FY2025, with 135 loans and $81.9 million in FY2026. Growth in dollars outpaced growth in loan counts, and the dip to 58 in FY2020 interrupted a steady climb.

Testing a 7(a) coffee concept

Coffee in Texas is a drive-time business, so a study should test the site's morning traffic, drive-through queue capacity, and the proximity of existing competitors; the franchise agreement's royalty and marketing fees against sales per week; and build-out cost against the loan sizes in this record. A branded concept should show the franchisor's disclosure figures next to local assumptions, not in place of them. Debt service coverage must hold when new stores open nearby, and the appraisal has to split the price between equipment, goodwill and any real estate, since goodwill is hard for a lender to recover.