SBA 7(a) Restaurant Feasibility Study in Vermont

Number one in Vermont, almost last nationally

Table-service dining is the largest single class in Vermont's 7(a) lending, ranking 1 of 39, yet the state ranks only 45 among states for the class. Approvals totalled 98 loans and $13.0 million across the ten fiscal years. The median of $82,500 is just 0.34x of the nationwide figure, a strikingly low ratio, while the bulk of loans cover $50,000 through $170,250. Franchising barely registers, at 2.0% of loans, so these are mostly independent dining rooms. That combination, a leading class in a small state with very small tickets, is what this cell contributes beyond Vermont's all-class picture and the national book.

The charge-off record

The most important numbers here concern losses. Of 57 loans funded in the early cohort, at least 12.3% have been charged off, and 3.5% by the five-year point, so most losses came late, and loans still open keep both rates open to rise. Cancellations are lower: at least 7.1% of approvals through FY2024, and the harsher ceiling is the same 7.1%.

Lenders and counties

Community National Bank holds 21 loans and $2.5 million. TD Bank, National Association holds 16 for $937,600; next comes Manufacturers and Traders Trust Company, 10 for $1.9 million; Heritage Family FCU 8 for $1.1 million, and Union Bank 8 for $839,500. The holder table follows SBA's records and nothing in it rates a lender's practices. Chittenden County has 32 loans, more than any other, followed by Franklin, Rutland and Washington with 10 each, then Bennington and Lamoille with 7.

Vermont dining room: the tests

Work for a table-service restaurant in a small market must first show where the covers come from. Resident demand alone may not fill a dining room, so visitor traffic, seasonal swings and the weekday-weekend balance need separate treatment, with a slow-season month shown honestly in the cash flow. Menu pricing and the cost of food and labor determine margin, and the high loss floor argues for a study that tests break-even at the lower end of sales. Because typical loans are small, the budget for kitchen equipment, lease improvements and opening inventory should be itemised and checked against quotes. If the loan buys a building, an appraisal must support the value apart from the business. Working capital that carries the owner through a weak year deserves explicit treatment.