Hotel Feasibility Study in North Carolina

North Carolina hotel credit runs through GBank

North Carolina's SBA hotel book has an unusual shape: one lender holds a large part of it. GBank holds 150 of the state's hotel and motel loans for $470.7 million, against 29 loans and $48.5 million at PromiseOne Bank, 23 loans and $76.3 million at Peoples Bank, 14 at Centerstone SBA Lending, Inc. and 11 at HomeTrust Bank. From FY2017 to FY2026 the state approved 522 hotel loans for $1.33 billion. Within North Carolina, hotels place 3 of 39 by loan count; nationally the state is 5 of 53 for the class; and at 2.05x, the location quotient puts lodging far above its national weight in the state's SBA lending. Size, cancellation and loss all stay within range of North Carolina lending overall and of hotels nationally.

At $2.3 million, the median deal is 1.08x what hotel borrowers take nationally, and the interquartile band runs from $1.4 million to $3.6 million. Franchised hotels make up 73.0% of the loans. SBA 7(a) accounts for 444 loans and SBA 504 for 78. Among certified development companies, Business Expansion Funding Corporation holds 34 loans for $93.1 million, 504 Capital Corporation 20 for $36.1 million and Carolina Business Capital, Inc. 17 for $49.8 million. The concentration in one 7(a) holder describes the loan book, not what that holder asks of a borrower.

Cancellations are low; the losses came late

Only 7.9% of FY2017 to FY2024 approvals were cancelled, a floor that becomes 8.6% when undisbursed loans are counted, so North Carolina hotel deals that win approval usually close. Losses are small and late. Of the 249 loans in the FY2017 to FY2021 disbursement cohort, the charge-off floor is 1.2% to date but 0.00% inside the first five years, which means every recorded loss in that group arrived after year five. A lender should read that as a reason to test refinance and renovation risk at the back of the term. Volume dipped to 41 loans and $89.2 million in FY2020 and to 35 loans in FY2023, then reached 55 loans and $168.2 million in FY2025.

What a North Carolina hotel study has to prove

Lending clusters in Mecklenburg with 53 loans, Guilford with 33, Cumberland with 30 and Wake with 26, with mountain counties Buncombe and Haywood at 15 each, alongside Durham. The study has to build occupancy and rate from the property's own comp set and from new rooms entering that market. Construction cost or the franchisor's required improvement plan must be priced from bids. The coverage test should run on revenue per available room at a soft point in the cycle and include the reserve for furniture and equipment replacement. The appraisal has to separate land and building, personal property and the going-concern value of the flag. Note that hotels and motels share one code, so these counts mix limited-service and full-service properties.