Charter School Feasibility Study in California

California leads the country, at a higher median

California is the leading state for SBA loans to elementary and secondary schools, ranked 1 of 50 on 138 loans and $170.2 million approved over FY2017 to FY2026; what is distinctive is its median loan, $980,000, or 1.43x the class midpoint nationally. Our screen finds that median distinct from both California's lending across all classes and the class nationally. The location quotient of 1.19x shows schools taking a slightly larger share of SBA lending in California than nationally, though within the state the class ranks only 24 of 39.

What the data actually captures

Read every figure here with the class definition in mind. Charters and private schools are filed under one shared code, so neither can be told apart from the other, and most charters are nonprofits, which SBA does not lend to, so the borrowers in this record are largely privately owned schools rather than charters. The middle half of California approvals runs from $350,000 to $1.6 million, the scale of a campus purchase or a substantial facility improvement. SBA 504 carried 56 loans and SBA 7(a) 82, and the 504 lenders are many and evenly matched: California Statewide Certified Development Corporation with 11 loans ($16.3 million), CDC Small Business Finance Corp. with 10 ($15.7 million), The Mortgage Capital Development Corporation with 8 ($16.6 million), and Business Finance Capital and Capital Access Group, Inc. with 7 each. U.S. Bank, National Association leads 7(a) with 11 loans for $11.9 million. Franchised schools account for 6.5%. Los Angeles County has 40 loans, San Diego 14, and Orange and Santa Clara 11 each.

Cancellations high, losses nil so far

For approvals from FY2017 to FY2024, the California cancellation floor is 15.3%, and 17.1% if loans awaiting disbursement are counted, so a school deal approved here has a real chance of not closing as approved. The loss record is clean: 0.00% of the 52 loans funded FY2017 to FY2021 have been charged off, whether inside five years or since. That is a floor on a modest cohort with loans still open, not a guarantee. For a lender, school borrowers here have repaid; the risk sits between approval and funding, when enrolment, permits and the property terms are still moving.

A California school study has to prove enrolment demand first: the school-age households in the draw area, their willingness to pay tuition, and the public, charter and private seats already competing for them. Cost follows, for acquisition, conversion or new classrooms, with permits and code upgrades priced. Coverage of the debt rests on tuition collected at a realistic enrolment and on how quickly new grades fill, so the study must demonstrate coverage for a loan near the $980,000 California median before any expansion is counted. The appraisal is a particular test for schools, which are special-purpose buildings; the study should show value in an alternative use as well as in use as a school.