SBA 7(a) Liquor Store Feasibility Study

Liquor store lending runs through 7(a)

SBA's 7(a) program approved 6,438 liquor store loans from FY2017 to FY2026, worth $4.68 billion, which is nearly all of the SBA's lending to the class. What makes the record worth reading is its lender and state concentration. Hanmi Bank holds 561 liquor store loans worth $473.8 million, The Huntington National Bank 313 worth $103.8 million and Bank of Hope 254 worth $146.0 million, while Manufacturers and Traders Trust Company has 220 and Metro City Bank 203 loans worth $553.3 million, the largest dollar total in the table.

Colorado second on the list

California leads with 1,189 loans, but Colorado is next with 666, ahead of New York at 557, New Jersey at 448, Georgia at 435 and Michigan at 386. The median loan is $440,000, and half of the liquor store loans fall between $150,000 and $927,000. Franchising barely exists in the class, at 0.78%. The median of $440,000 and the middle half from $150,000 to $927,000 give the reference range for any request, and California's 1,189 loans make it the largest single state, so national figures lean toward its record. On outcomes, at least 12.6% of liquor approvals from FY2017 through FY2024 were cancelled, with a 13.2% ceiling, and of 2,907 liquor loans that funded in FY2017 to FY2021, 2.5% have been charged off at the floor and 1.2% inside five years. Approvals peaked at 800 loans and $708.6 million in FY2021, and FY2025 recorded 748 loans worth $561.3 million.

Licenses, registers and a 7(a) liquor study

When a 7(a) loan buys an existing liquor store, the feasibility study has to verify the store before it projects anything. That means rebuilding sales from register and distributor records, testing gross margin by category, counting inventory at closing, and checking any lottery commission and its share of traffic. The license matters most: the study has to confirm that the state and local license will transfer, on what timetable, and whether the state limits the number of licenses. Demand for a new or relocated store means the households nearby, the competing stores and any grocery or chain store allowed to sell the same products. Debt coverage needs to survive weaker sales than the seller's best year. The appraisal should separate business and license value, and the study should state how much of the price is the license.