Hotel Feasibility Study in Michigan

Under-weighted, but spread across the state

Hotels take a smaller part of Michigan SBA lending than of national SBA lending, with a location quotient of 0.73x, though hotels still rank 6 of 39 among Michigan classes and Michigan stands 12 of 53 for hotel loans. The 318 approvals from FY2017 to FY2026 carried $643.4 million. What stands out on the map is spread: Wayne County leads with only 35 approvals and Oakland has 26, while Cheboygan, Calhoun and Macomb have 13 each and Berrien 12. Hotel lending here is not a single metro story.

No metric in this Michigan cell is flagged against the state's all-asset book or against hotels nationally. The median loan is $1.8 million, 0.82x the national hotel median. The middle half of loans spans $853,125 to $3.0 million. Franchise flags are on 62.6% of loans, and FY2026 brought 34 approvals worth $85.8 million.

Lenders and outcomes

Shoreham Bank is the current holder of 45 loans worth $130.2 million, the largest 7(a) book, ahead of GBank with 22 worth $74.7 million. Nicolet National Bank and Celtic Bank Corporation hold 13 Michigan hotel loans each. Michigan Certified Development Corporation holds 43 of the 504 loans for $98.1 million and Great Lakes Commercial Finance 23. SBA 7(a) accounts for 247 approvals and SBA 504 for 71.

For Michigan hotel approvals of FY2017 to FY2024, at least 8.1% were cancelled; the ceiling of 10.0% shows some recent Michigan approvals still waiting to fund. Among 151 Michigan hotel loans from FY2017 to FY2021 disbursement, 2.0% have been charged off so far and 0.66% in the first five years. A lender reading those floors should remember the cohort is still repaying and the numbers can only rise.

Testing a Michigan hotel

Because the approvals are scattered, a feasibility study cannot borrow a statewide view. Demand has to be read from the generators in the specific market, and if that market is seasonal, the seasonality must show up in the monthly cash flow rather than in an annual average. Cost should include any brand-mandated renovation. Debt service coverage has to survive the weakest months of the year, and the appraisal must be tested against sales of comparable flagged and independent properties in that region. One code covers hotels and motels, so these Michigan figures mix limited-service and full-service properties without a way to separate them.