SBA 7(a) Liquor Store Feasibility Study in Massachusetts

Package stores, almost no franchising

Liquor stores place 7th among Massachusetts asset classes, and the state is 11th for the number of such 7(a) loans. SBA approved 208 since FY2017, worth $82.4 million. The first thing that separates this cell from retail classes generally is brand structure: franchises account for 0.48% of loans, so a license-holding owner-operator is nearly always the borrower. The median of $195,600 is 0.44x the nationwide 7(a) median for liquor stores, and the loans nearest the centre lie between $50,000 and $491,000.

Why the median is low

Massachusetts package stores are often small buildings or leased storefronts, where the money goes to inventory, fixtures and the purchase of an existing licence and business. The cell therefore reads as acquisitions of going concerns more than as new construction. A buyer comparing a seller's price with this median should expect the lender to ask what portion is goodwill and what portion is stock.

Losses are low once funded

Among the 113 loans that funded in FY2017 through FY2021, 1.8% are charged off to date and 0.89% were charged off within five years. Those are floors for loans still open, but they are modest. Cancellation is the weaker side: 14.1% of approvals from FY2017 to FY2024 fell away, or 15.9% when undisbursed loans are added. A purchase that depends on a licence transfer can stall for reasons outside the lender's control.

Lenders and counties

Eastern Bank holds 44 loans and Rockland Trust Company 38, with TD Bank, National Association at 19, Leader Bank, National Association at 14 and Santander Bank, National Association at 13. Present-holder records say nothing about any bank's standards. Middlesex County has 49 loans, Essex 26, Plymouth 25, Worcester 22 and Suffolk 21. Volume swung widely: 42 loans in FY2018, 6 in FY2023, 31 in FY2025 and only 7 in FY2026.

What a Massachusetts liquor store study has to test

The licence is the first condition, since the seller's licence may not simply transfer and local licensing rules must be checked. After that, the study should test sales by category, margin, the competing stores and the effect of nearby grocery and online sales. Inventory financing should be separated from goodwill, and the price paid should be tied to documented earnings. Loan payments must be covered after a slow season and a reduction in margin, and the appraisal of a going concern depends on records the seller can produce.