SBA 7(a) Grocery Store Feasibility Study in Ohio

Ohio grocery stores: tiny loans, wide cancellation gap

Grocery stores are the eleventh-ranked class in Ohio, and the state places 5 among states for 7(a) grocery loans, with 169 approvals across FY2017 to FY2026 worth $57.9 million. Our test flags cancellation, which splits unusually: at least 2.3% of approvals through FY2024 were cancelled, but the ceiling, which counts undisbursed loans as cancelled, is 5.4%. That distance points to a block of approvals still waiting to be funded when SBA's files were read. The median loan is $80,000, only 0.26x the nationwide benchmark, and $50,000 to $462,000 marks the middle half.

The Huntington table

The Huntington National Bank holds 87 loans worth $15.6 million, more than half the record. First Financial Bank and KeyBank National Association each hold 9, with $3.3 million and $2.8 million, and U.S. Bank, National Association holds 6 worth $1.2 million. Franchised stores are 3.6% of loans. Each row names a holder in SBA's file and tells us nothing of policy. Franklin County has 40 loans, Cuyahoga 20, Hamilton and Montgomery 9 each, Lorain and Summit 7 each, Lake and Portage 6 each, and Lucas and Wayne 5 each.

Charge-offs run high

The charge-off floor is 9.7% to date for the 72 loans funded in the early cohort, and 5.6% inside five years. These are heavy numbers for a class with small tickets, and open loans can add to them. A lender should weigh them against the low cancellation floor.

Testing an Ohio grocery store

Grocery margins are thin, so the study has to be rigorous. It should size the trade area and the household spending it supports, count competing supermarkets, discounters and convenience stores, and test gross margin by department against payroll, rent and shrink. Stock is the biggest working capital line, so the budget should show how much inventory the loan carries, beside a ticket near $80,000. Show coverage at weaker sales than plan. Under the 7(a) program a private lender makes the loan, and the appraisal separates business value from any real estate.

Franklin and Cuyahoga counties dominate the listing, so a store in a smaller town finds little nearby precedent. Identify the nearest listed county it borrows evidence from, explain differences in household spending and competing formats, and show why a store of this size can survive beside the discounters and supermarkets already operating there.