SBA 7(a) Restaurant Feasibility Study in Rhode Island

The smallest restaurant loans in this set, and a high cancellation floor

Table-service restaurants in Rhode Island borrow remarkably little from SBA's general program, with a median of $125,000, a mere 0.51x the figure for the class nationwide. Approvals over FY2017 to FY2026 numbered 182 and came to $57.0 million in gross dollars, with loans between $60,750 and $313,500 forming the central half. The state is 36th by count, yet restaurants lead its list of 39 classes. A franchise stands behind 3.3% of the loans.

Cancellations and charge-offs

At least 15.4% of Rhode Island approvals through FY2024 were cancelled, and 16.1% if loans never disbursed are counted, a high floor beside other states. In the funded cohort of 82 loans the to-date charge-off floor is 7.3%, well above the 2.4% recorded over the first five years, which means much of the damage arrived late. Lenders should plan for a long exposure on small loans, and every figure remains a floor.

Banks and counties

Santander Bank, National Association holds 31 loans worth $8.0 million. Beacon Bank and Trust holds 15 worth $1.3 million, BankNewport 14 worth $1.3 million, Eastern Bank 12 worth $2.5 million and Citizens Bank, National Association 11 worth $6.6 million. A holder table is silent on practices. Providence County has 97 loans, far ahead of Kent with 28, Washington with 22, Newport with 21 and Bristol with 14. Approvals fell from 30 in FY2017 to 7 in FY2020 and reached 27 in FY2025.

What a Rhode Island restaurant study must test

A median of $125,000 means most borrowers appear to be buying a restaurant already open or equipping small leased space, and the price should meet documented sales. Newport and the Washington County shore depend on visitors, and Providence on residents and workers, so the study must separate seasonal revenue from year-round revenue and model each month. Rent against sales, labour, and the density of competing restaurants should be tested. Because cancellations are high, the study should settle the lease, the liquor licence and any seller financing before any commitment. Cautious covers per day should carry the loan payment in the forecast, and the appraiser will lay earnings beside the price paid.