Hotel Feasibility Study in the Minneapolis-St. Paul-Bloomington, MN-WI Metro Area

A hotel record that is almost all 504

The Twin Cities hotel file is unusual in its program mix: 38 of the 48 loans are SBA 504 and only 10 are SBA 7(a). That tilt toward fixed-asset financing, together with a 75.0% franchise share, describes branded properties built or bought with development-company help. Hotels sit fifteenth locally, 15 of 39, and a 0.21x location quotient leaves the class far under its national weight, so lodging is a small part of Minneapolis-St. Paul lending even though the metro stands 35 of 807 nationally. Over FY2017 to FY2026 the loans total $87.7 million.

In the Twin Cities, the midpoint loan is $1.6 million, which stands at 0.72x of the national class midpoint; half the loans fall from $970,750 to $2.5 million. Those tickets are smaller than the typical hotel loan nationally, which fits limited-service product more than full-service, though the lodging code spans motels and hotels alike, so the file cannot make that call for us and a study must name its type.

The development companies

Development companies fill the 504 table: 14 loans and $21.6 million with Midwest Business Finance Corporation, 10 loans and $23.8 million with Twin Cities-Metro Certified Development Company, 5 loans and $4.5 million with Amplio Economic Development Corporation, so dollars per loan differ markedly from one to the next. These names are only the holders SBA lists today, and they imply no view of any lender's practices. Hennepin County, MN has 9 loans, Dakota County, MN 8, Ramsey County, MN 6 and St. Croix County, WI 5, so the Wisconsin edge of the metro is represented.

The cohort of approvals from FY2017 to FY2024 shows 13.2% cancelled at minimum, 13.2% at maximum if undisbursed loans count, and no published charge-off rate; that last blank is not zero. Printed years are FY2017 (9 loans, $15.7 million), FY2019 (6, $13.3 million), FY2022 (6, $12.3 million) and FY2024 (5, $9.2 million). The remaining years are held back. A loan counts toward the Minneapolis-St. Paul metro only if its project county sits in the area under the July 2023 delineation.

Twin Cities lodging: what a study must show

Winter and shoulder seasons make the demand test central: corporate, airport, event and leisure travel must be measured against rooms already open in Hennepin, Dakota and Ramsey counties. The brand's requirements, a budget set against that $1.6 million midpoint and operating costs have to be checked against occupancy and rate, with debt service coverage tested in the weakest months. Real estate and going concern are valued separately. Loan Analytics prepares the finished study under Daniel Smith, MAI; whether a lender approves a request is the lender's decision alone.