SBA 7(a) Grocery Store Feasibility Study in New Jersey

A grocery book with a late-arriving loss pattern

New Jersey stands seventh among states for SBA 7(a) grocery lending, with 153 loans worth $107.6 million approved across FY2017 to FY2026. At state level the class lands at 11 of 39, so groceries are a real but not leading use of the program there. Its $250,000 median sits at 0.81x of what grocers get nationally, yet loans in the central band range from $60,000 up to $1.1 million. That spread means the typical Garden State grocery borrower is a small corner market while a meaningful tail finances large-format stores, and no single ticket describes the class. Franchise affiliation is almost absent at 0.65%, so borrowers are independents or regional operators.

What the outcome floors reveal

The sharpest feature of this cell is the gap between two charge-off measures. For the funded group of 68 loans approved in the early years, 13.2% have been charged off to date, yet 0.00% were charged off inside the first five years. Losses in New Jersey groceries therefore tend to surface after year five rather than early, which a lender reading only a short window would miss. Up front, 17.7% or more of the approvals made through FY2024 were cancelled, and 18.5% if undisbursed loans count as cancelled, so many approved plans never reached a closed loan. Open loans keep every rate in this paragraph a floor.

Holders, counties and the yearly rhythm

SBA lists TD Bank, National Association as the current holder of 32 of these loans, worth $6.3 million, which implies small tickets. NewBank holds 19 loans worth $21.9 million, a far larger average, and Bank of Hope holds 6 worth $12.4 million. Manufacturers and Traders Trust Company holds 13 worth $838,700, and PNC Bank, National Association holds 6 worth $1.0 million. Those are holder entries in SBA data and say nothing about anyone's underwriting. Essex County leads with 21 loans, Passaic has 18, Bergen 14, and Middlesex 13, with Camden, Morris and Ocean at 11 each. Volume was highest in FY2017 with 26 loans and $17.5 million, dipped to 8 loans in FY2020, and stood at 12 loans and $13.4 million in FY2026.

Testing the trade area takes unusual care for a New Jersey grocery, and the study carries that burden. Dense neighbourhoods may already hold supermarkets, ethnic markets and discount formats, so the study should map them, estimate the weekly food spend a catchment can support, and set the store's sales per square foot against realistic capture. Margins are thin and inventory is a large use of funds, so working capital and shrink belong in the debt service model, with a lower-sales case beside the base case. Because losses appear late in this class, the coverage test should look at years six and beyond, including lease renewal and equipment replacement. The appraisal must separate real estate from fixtures and the going concern, and the study should follow that split. No approval is implied by any of this.