SBA 7(a) Grocery Store Feasibility Study in Texas

Big grocery loans and a high charge-off rate

Grocery loans in Texas under 7(a) are large and risky at the same time. The median of $575,250 is 1.86x the nationwide 7(a) median for grocery, and loans in the middle range from $150,000 to $1.7 million. Among the 54 loans funded from FY2017 to FY2021, charge-offs stand at 11.1% today and the same 11.1% was reached by year five. Cancellation of FY2017 to FY2024 approvals is 14.8%, whether or not undisbursed loans are added. All three are floors.

Where the cell sits

SBA approved 170 grocery loans in Texas since FY2017, worth $200.5 million. Texas ranks fourth among states for the class by loan count, yet grocery holds only 17th place among the state's 39 classes. Franchising is limited at 3.5% of loans. The mix reads as independent grocers buying stores and fixtures.

A rising dollar line

The last two years carry most of the money. FY2025 shows 27 loans worth $28.1 million, and FY2026 shows 28 loans worth $55.2 million, the largest year by far, against 8 loans and $2.2 million in FY2017. A borrower today is entering a market that lenders have recently funded heavily, and the recent loans have had little time to reveal their outcomes.

Holders and places

Top of the listing is The Huntington National Bank with 16 loans, then PNC Bank, National Association with 12 and Wallis Bank with 8. These are present holders per SBA, and they imply no policy. Dallas County has 27 loans, Harris 26, Travis 14, Williamson 12, and McLennan and Tarrant 10 each. The lending is spread over several metros rather than centred on one.

What a Texas grocery study has to test

The study must show the trade area's demand and the formats competing for it, from national chains to specialty markets, and the share a new store can win. Sales per square foot should be tied to rent, payroll and the loan. With a median above half a million dollars, equipment and inventory need itemised lists, and ownership of the building should be clear. Because the charge-off rate is high for this cell, the repayment test must survive a weak first year and a price war with a nearby chain. Summer power costs for refrigeration deserve a line, and the appraisal will need sales support.