Charter School Feasibility Study in Texas

Texas school loans run large

The distinctive number for Texas schools is the size of the loan. The median SBA loan to a Texas elementary or secondary school from FY2017 to FY2026 is $1.1 million, 1.67x the national school median, and it stands apart from the Texas all-class median by more than our screen's margin as well. Texas is also a leading market: 131 approvals worth $191.4 million rank it 2 of 50 among states. At 1.96x, the location quotient shows schools weighing far more in Texas SBA activity than in the national book, even though the class is only 20 of 39 among Texas classes.

Campuses and branded schools

These are mostly property loans. Texas school approvals cluster between $490,000 and $2.2 million in their middle half, and SBA 504 carries 44 of them against 87 under SBA 7(a). A franchise share of 34.4% is high for education and points to branded private school systems. Capital Certified Development Corporation holds 23 of the 504 loans worth $44.7 million, LiftFund, Inc. holds 7 for $9.9 million, and 6 worth $11.9 million sit with Greater East Texas Certified Development Company. MidFirst Bank leads the 7(a) holders with 7 loans for $9.5 million, followed by BayFirst National Bank, Hancock Whitney Bank and The Huntington National Bank. Harris County has 21 approvals and Collin 20, with Williamson at 15 and Denton at 12.

Early losses and slow draws

Texas school loans show their losses early. Of 58 funded in FY2017 to FY2021, 5.2% or more are now written off, and the five-year figure is also 5.2%, meaning each Texas school loss so far landed in the opening years. Cancellation after approval is at least 7.1% for FY2017 to FY2024 approvals, but the ceiling is 13.4%, a wide spread that reflects approved school loans still waiting to disburse.

Early failure is the risk a Texas school study has to address head on. Demand means enrolment: the families within commuting distance who will pay tuition, the competing private and charter options, and how many students stay from one grade to the next. Cost covers acquisition or construction of a campus that meets code for its age groups, priced from bids. Debt service coverage depends on tuition revenue at an honest enrolment ramp, since the record shows losses arriving inside five years, and on teacher payroll that cannot shrink with a small class. The appraisal of a school building is a special-purpose valuation, so the study should show what the campus would be worth to another school or to a different use.

Charter schools cannot be isolated in this data. They share a code with private schools, and most charters are nonprofits that SBA does not lend to, so the Texas figures describe for-profit private schools far more than charter operators.