Hospital Feasibility Study in California

The largest state, a thin class

California ranks first among 42 states for hospital loans, and yet the record is slim: 29 loans across FY2017 to FY2026, worth $23.1 million. Hospitals stand 33 of 39 inside California's own lending, and a location quotient of 0.96x puts them right at the national weight. The state leads because it is large, not because hospitals are common in its book. Its typical loan is $250,000, or 1.16x the median for hospital loans elsewhere, and the central half of loans spans $38,200 to $615,000.

Small loans for an enormous facility type

Those figures should reset expectations. A hospital is among the costliest buildings a borrower can develop, but a median loan near $250,000 shows that SBA lending in this class mostly reaches smaller entities: specialty or physician-owned facilities, equipment and working capital, practice purchases. SBA 7(a) covers 26 of the loans and SBA 504 covers 3. Franchising is absent, at 0.00%. Los Angeles County has 13 of the loans, San Diego 3, and Fresno, Orange and Sacramento 2 each. Yearly counts range from 1 to 5, with no sign of a sustained rise.

Coding limits and withheld rates

No code exists for critical access hospitals, so they sit inside the class and the 29 loans may mix several kinds of facility. Hospital cancellation and charge-off rates cannot be printed for California, since a dependable rate needs a larger cohort; the page offers no stand-in and does not call either one nil.

Tests for a California hospital

Work on a California hospital has to start with licensure and need: the service lines, the beds, the regulatory approvals and the building standards that drive cost. It should test the catchment's demand for the service line against hospitals already operating, and the payer mix, because reimbursement determines whether volumes translate into cash. Construction or conversion cost should be set against what lenders in this class have actually financed, which suggests most borrowers are far smaller than a full acute-care campus. Debt service coverage must be shown on conservative volumes with a long ramp, and the appraiser will want the licence, the equipment and the earnings considered together. A project too large for SBA's ceiling would need other financing, and the study should say so plainly.