Charter School Feasibility Study in Virginia

School lending that leans on 504

Virginia is a significant market for private school lending in the SBA files, and the figures here are for the whole elementary and secondary class, charter schools included. Between FY2017 and FY2026 SBA approved 25 loans, worth $32.4 million, ranking Virginia 11 of 50. A location quotient of 1.58x shows schools claiming a larger share of approvals than the national share does. Within the state the class sits 20 of 39, and the typical loan, $560,000, comes to 0.82x the national median. No single measure cleared our test for being distinct from both parents.

Buildings, not working capital

SBA 7(a) carried 13 loans and SBA 504 carried 12, a balance showing that many borrowers bought or improved a campus. The middle half runs from $396,000 to $1.8 million, and franchise affiliation appears in 8.0% of loans. FY2021 was the biggest year, with 5 loans for $10.0 million; FY2020 and FY2023 each saw just 1. Because the dollar total rests on a few large projects, the year-to-year line is more a record of individual schools than of a policy cycle.

Certified development companies and counties

The 504 lender table is led by Business Finance Group, Inc., with 6 loans worth $8.6 million, then 504 Capital Corporation with 5 worth $5.6 million; as the page notes, these are SBA's entries for the current holder of each loan. Fairfax County has 4 loans, Alexandria City and Loudoun 3 each, and Chesapeake City, Norfolk City, Prince William and Virginia Beach City 2 each. The percentages for cancellation and charge-off are withheld because the cohorts are small, and a withheld rate is never a zero rate.

The charter-school caveat and the study

The industry code cannot separate charter schools from private ones, and since most charter schools are run as nonprofits that SBA does not finance, a charter operator should read this page as a record of for-profit and private schools, not of charters. A study here has to test enrolment demand by grade band and catchment, tuition or funding assumptions, teacher supply, accreditation and licensing steps, and the cost of converting or building a facility to school code. Coverage of debt service should be demonstrated with first-year enrolment far under capacity, and an appraiser will weigh how few other uses a school building can serve when it sets value.