SBA 7(a) Liquor Store Feasibility Study in Pennsylvania

A licence-driven class in Pennsylvania

Liquor stores in Pennsylvania account for 183 loans through 7(a), $122.2 million in all, with a median loan of $490,000, 1.11x what liquor store borrowers elsewhere receive. The central half spans $145,000 to $915,000. Within Pennsylvania the class takes 9 of 39 places, while the state itself ranks 12 in the program. There are no franchise loans, a printed franchise share of 0.00%.

Floors

Cancellation was 11.2% or more of approvals made FY2017 through FY2024, 11.8% counting undisbursed loans. For the 90 loans in the FY2017 to FY2021 cohort, 2.2% appear as charged off so far, and none inside five years, a printed 0.00%. Each figure is a floor, and a few loans would shift either number.

Lenders

Fulton Bank, National Association is first at 12 loans and $13.6 million. Next at 11 loans each are Wilmington Savings Fund Society FSB ($7.2 million) and Manufacturers and Traders Trust Company ($2.4 million), Firstrust Savings Bank 10 and $9.7 million, and First Commonwealth Bank 10 and $4.6 million. SBA reports present holders, so no lender here is shown to prefer the class. No bank holds more than 12 loans, so the book is spread widely. By county, Allegheny has 18 loans, Delaware and Philadelphia 17 each, and Bucks and Montgomery 15 each.

Timing

The peak was FY2021, with 36 loans and $24.5 million, followed by $23.3 million in FY2022 on 22 loans; FY2023 dropped to 12 and FY2026 sits at 12 loans and $7.8 million. Dollars swing more than counts, because a few large purchases of stores with real estate lift a year's total, and that is worth remembering when reading any one annual figure as a sign of demand.

Testing a Pennsylvania liquor store

Alcohol retail is licensed, and a study has to say which licence the shop will hold and how that licence is acquired and transferred, since a lender is financing a licence-dependent business. It should test the trade area, the competition from other licensed outlets, inventory financing, and the lease or real estate cost. Coverage should hold in a weak year, and the appraisal should divide value among the property, the inventory and the licence.