Charter School Feasibility Study in Pennsylvania

Franchise flags on more than a quarter of the loans

The first thing Pennsylvania's school record shows is branding: 28.0% of its loans carry a franchise flag. Schools of every kind from elementary to high school, charters included, make up the class: 25 loans for $22.2 million in gross dollars were approved over FY2017 to FY2026. The state is 11 of 50 in the national ordering for this class but only 23 of 39 in its own list of asset classes, and the location quotient of 0.84x means schools take a slightly smaller bite of Pennsylvania lending than of lending nationwide. Loans are heavy: a median of $800,000 is 1.17x the national median for the class.

Sizes, programs and places

Half of all loans fall between $150,000 and $1.5 million. SBA 7(a) carried 21 of them and SBA 504 only 4. Berks and Montgomery counties each have 5 loans, Philadelphia has 4, and Allegheny and Westmoreland have 3 apiece. Timing was uneven. The count reached 7 in FY2018 and 5 in FY2019, then stayed at 2 or fewer a year from FY2020 through FY2026, so the early years carry most of the history and recent lending is thin.

What this class does not say about charters

The code that covers charter schools is the one private schools use, so the two cannot be pulled apart. Most charters are organised as nonprofits, a borrower type SBA turns away, so these loans reveal little about the charter sector itself. The franchise share points toward branded education operators instead. Cancellation and charge-off rates stay unpublished here because the cohorts hold fewer than 30 loans, a count below which Loan Analytics, by its own rule, does not show a rate; and an unpublished rate should not be read as zero.

Proving a school can fill

Lenders reading a school proposal look for evidence of enrolment before anything else. A Pennsylvania study therefore has to count the children in the catchment, name the schools they already attend, and show where per-pupil funding or tuition comes from. A charter's timeline depends on its authorising body; a private or franchised school answers to licensing and curriculum rules. The building is normally the largest cost, so a lease or purchase should be tested against loans that often exceed $800,000, and the study should say who pays for tenant improvements.

Payment coverage ought to be built on enrolment the operator can document, with a slow-fill case beside it, since staff must be hired before the last seat is sold. An appraiser will value the building by what it could become if the school closed, so the study should price that alternative use instead of assuming success.