Hotel Feasibility Study in Utah

Utah hotels split between the programs

Utah's hotel lending runs through SBA 504 almost as much as 7(a): of 165 approvals from FY2017 to FY2026, worth $357.2 million, 82 used SBA 504 and 83 used SBA 7(a). That balance reflects borrowers buying and building properties with long-term fixed-rate debt. Utah ranks 25 of 53 among states and hotels rank 7 of 39 among Utah classes, but the location quotient of 0.73x shows the class lighter in Utah's SBA mix than nationally. The median of $1.9 million is 0.88x the national hotel median, and our screen flags nothing.

Mountain West and the rural counties

Mountain West Small Business Finance holds 64 of the 504 loans, worth $138.0 million, and Intermountain Business Lending, Inc. holds 12 worth $31.3 million. Among 7(a) holders, Mountain America FCU has 13 loans for $24.4 million, America First Federal Credit Union 5 for $16.3 million and State Bank of Southern Utah 5 for $1.5 million. Approvals in the middle half run from $800,000 to $3.5 million, and 52.1% carry a franchise. Salt Lake County has 25 approvals, but Washington has 23 and Garfield 13, with San Juan and Utah County at 9 each, so much of the book sits outside the urban core.

Outcomes in Utah

Across 86 Utah hotels funded in FY2017 to FY2021, Utah lenders have written off nothing yet, 0.00% so far, 0.00% inside five years. Utah cancelled 6.2% or more of its FY2017 to FY2024 hotel approvals, 9.3% at the outside. Volume swings: 8 approvals worth $15.4 million in FY2023, then 27 worth $69.9 million in FY2025.

With so much of Utah's hotel lending in counties such as Garfield, San Juan and Washington, a feasibility study has to read demand from the specific location: where visitors come from, how seasonal they are and what new rooms are coming. Construction or renovation cost should come from a contractor's priced scope. Coverage of debt service needs a month-by-month view as well as an annual one, so that seasonal troughs are covered, and stressed for a weaker peak season. The appraisal will lean on the competitive set and the income approach, and the study should give the appraiser occupancy and rate assumptions, adjusted for season, that hold up.

Utah's figures fold motels, limited-service hotels and full-service hotels into one industry code that cannot be split.