Land Subdivision Feasibility Study

Questions buyers ask

Who can prepare a subdivision feasibility study that my lender will accept?

Loan Analytics writes it as an independent report for the lender's own file; Daniel Smith, MAI puts his signature to it. The study is written for whichever lender holds the request: an SBA lender under 7(a) or 504, a lender working under USDA Business and Industry, or the bank or private lender making a conventional acquisition and development loan. It sets the subdivision beside the SBA record printed here, 130 7(a) loans and 9 504 loans to land subdividers from FY1991 to FY2026, and then does the work that record cannot: the absorption schedule, the entitlement timeline, the development budget and the repayment test driven by lot sales.

Do subdivision lenders ask for a feasibility study before they commit?

This page cites no rule that makes a study mandatory for every subdivision loan; the requirement comes from the lender's credit policy and the program. What the record shows is why lenders ask for one. The SBA approved no land subdivision loan in FY2024, FY2025 or FY2026, approvals from FY2017 to FY2024 carry a 12.5% cancellation floor, and no charge-off rate can be printed because the disbursed cohort has fewer than 30 loans. A lender facing a subdivision request has little program history to lean on, so the study becomes the main evidence that lots will sell at the projected pace and price.

How much does a land subdivision feasibility study cost?

Land subdivision has no line of its own in this site's 2026 fee survey. Its published bands are $5,000 to $12,500 for one site with a standard special-purpose asset, while complex studies run $10,000 to $25,000, a tier the survey describes as covering multi-site work and construction delivered in phases; a subdivision delivered in phases fits that description. Work answering USDA's 7 CFR Part 5001 falls in the survey's band of $7,500 to $18,750 and above. Against a median SBA subdivision loan of $100,000 any of those fees is heavy, while against a development loan sized to a full plat it is a modest line. We set the fee once the scope is fixed.

How long does a land subdivision feasibility study take?

This page states no standard turnaround, and a subdivision study is timed to its scope. The timeline depends on how far the project has come. Land with zoning in place and a preliminary plat approved needs less entitlement work than raw acreage; a single phase needs one absorption schedule, while a phased plat needs one for each phase; and the survey of competing subdivisions takes longer where the local approval pipeline is long. The scope reply states a timeline measured against the lender's deadline, so send that deadline with the request, and order the study early enough that its absorption schedule can inform the appraisal rather than chase it.

What does a land subdivision feasibility study test?

It tests, in the order a lender reads them: absorption, meaning how many lots the submarket will take each year, at what prices and from which builders, against every competing plat; entitlement, meaning zoning, plat approval, utility capacity, impact fees and how long each step has taken locally; cost, meaning land, engineering, grading, streets, utilities, drainage and the security a county or city takes for public improvements; and repayment, meaning lot closings that retire the debt at the projected pace and at a slower one. The SBA record on this page frames the request: 32 loans from FY2017 to FY2026, all 7(a), at a median of $100,000.

Can I finance a land subdivision with an SBA loan?

Rarely, on this record. The archived passage on this page notes that SBA eligibility rules lean against speculative development and investment real estate, and the loan data agree: 130 7(a) loans and 9 504 loans in the full FY1991 to FY2026 record, 32 loans in the FY2017 to FY2026 window, and none after FY2023. The loans that did close were mostly small, with a median of $100,000. Where an SBA loan fits, the archived reading is that an operating business stands behind it; a pure lot development project more often goes to a bank or private acquisition and development lender, or is funded with the developer's equity, and the study is written to serve that lender just as well.

How many SBA loans have gone to land subdivision projects?

From FY1991 to FY2026 the SBA approved 130 7(a) loans to land subdivision projects for $32.8 million, and 9 504 loans for $5.2 million. The years FY1991 to FY2002 cannot be measured for this class, so the readable record runs from FY2003. In the FY2017 to FY2026 window there were 32 loans, all 7(a), for $9.5 million. The class counts only borrowers whose own industry code is land subdivision; a homebuilder, or an operating business that splits a parcel from its land, is counted in its own industry, so SBA money that reached lot development under other codes is not in these figures.

Has the SBA approved any land subdivision loans recently?

Not since FY2023. The table records 0 loans and $0 in both programs for FY2024, FY2025 and FY2026, the first empty years since measurement began in FY2003. The last approvals were 3 7(a) loans in FY2023, whose dollar total is withheld, after 5 loans for $1.9 million in FY2022 and the window's peak of 8 loans for $5.5 million in FY2021. A borrower applying now is asking an SBA lender for something the program has not approved in this class for several years, which raises the burden on the study to show eligibility and repayment from the project's own evidence.

How large are SBA land subdivision loans?

Small, for the most part. In the FY2017 to FY2026 window the lower quartile is $40,000, the median $100,000 and the upper quartile $417,500. By size band, 19 loans sit in the smallest band for a combined $987,000, 4 in the second band, 7 in the third band for $4.6 million and 2 in the fourth band; no loan sits above the fourth band. A loan that pays for the horizontal development of a full plat will typically sit well above the median, among the few larger approvals in the record, and the study has to justify that amount from the plat's own budget and lot count.

Which states have the most SBA land subdivision loans?

California leads the FY2017 to FY2026 window with 6 loans and $2.0 million, the only state row with a printed dollar total. Oklahoma is second with 4 loans, Arizona and Texas follow with 3 each, then Massachusetts, New York and West Virginia with 2 each; for all of those the table shows the count alone, since a total over fewer than five loans would disclose an individual borrower's loan. Every other listed state has 1 loan, and states missing from the table have none. No state row is deep enough to carry a median, a program split or a rate, so the state row is context for a lender, not a benchmark.

Is a land subdivision loan more likely under 7(a) or 504?

On this record, 7(a). Every one of the 32 loans approved from FY2017 to FY2026 is a 7(a) loan, and 504 shows 0 in every year of that window. The 504 program's whole subdivision record is 9 loans for $5.2 million, all approved between FY2003 and FY2016. A borrower considering a 504 structure for lot development will need an answer for the lender on why the project fits a program the class has not used since FY2016, and the study should answer from the operating business and the project's own repayment evidence.

What is the default rate on SBA land subdivision loans?

The page does not print one, and its absence is no evidence of zero losses. The charge-off measure covers loans approved from FY2017 to FY2021 and disbursed, and that cohort has under 30 loans in it, short of the minimum the page sets for any rate; the same holds for the 5-year charge-off measure. A lender therefore has no SBA loss rate for this class, and a study cannot cite one. What the study can do is show how the project's own debt behaves when lot sales slow: the month in which carrying costs overtake closings, and the reserve or equity that bridges the gap.

How often are SBA land subdivision approvals cancelled?

The cancellation floor is 12.5%, measured on approvals from FY2017 to FY2024. Since no loan was approved in FY2024, that cohort is effectively the window's full 32 loans, enough for the page to print a rate; because it is a floor, the real rate may exceed it but cannot fall below it. The page does not say why approvals were cancelled. A subdivision does have several points where a committed loan can fail to close, among them a plat held up in review, utility capacity that is not there, a builder who walks away and an appraisal below cost, and the study is where each of them is tested before the lender commits.

Which lenders make SBA land subdivision loans?

This page names no lender for land subdivision, and none should be inferred from it. With 32 loans in the FY2017 to FY2026 window spread across the states in the table, and no state above 6 loans, the class does not support a lender ranking. The study is written for whichever lender the borrower brings, SBA, USDA Business and Industry or conventional, and it does not depend on that lender having a subdivision book of its own; it gives the credit officer the market, entitlement, cost and repayment evidence directly, with the SBA record on this page as context.

What will a lender look for in the absorption analysis?

Evidence that the projected lot sales are local and current. That means closed lot sales and new home sales near the site by price band, builder purchase agreements or letters of intent, the sellout pace of the nearest competing subdivisions, and the lots already approved or in review that will compete for the same builders. The SBA record shows why this carries the case: with no approvals since FY2023, and a recent book in which FY2021 alone supplied $5.5 million of the $9.5 million, a lender cannot infer demand from program activity. The absorption schedule has to stand on market evidence, with a slower alternative presented beside it.

How does the feasibility study relate to the appraisal on a subdivision?

They have to agree. The appraisal values the tract by the subdivision development method, discounting projected lot revenue for the time the lots take to sell and the cost of holding them meanwhile, and that discounting rests on the same sellout schedule the study builds. If the study projects a faster pace than the appraisal assumes, the lender will believe the appraisal. Loan Analytics writes the absorption schedule and the entitlement timeline so that the appraiser can rely on them. On a loan in the third size band, which alone carries $4.6 million of the window's dollars, or in the fourth, that agreement largely decides the loan amount.

Why is my homebuilding company's loan not counted on this page?

Because the borrower's industry code decides the class. A loan counts as land subdivision only when the borrower is coded as a land subdivider; a homebuilder, or an operating company that divides off part of its own land, is counted in its own industry. That is one reason the record is small, 130 7(a) loans across the measurable years, and why a study should not treat it as the whole of SBA exposure to lot development. For a builder who also subdivides, the study can still use this page's figures as context while drawing its comparables from the local market.

Can the same study serve an SBA lender and a bank or USDA lender?

Yes, if it is scoped for all of them from the start. The archived text on this page lists the routes a subdivision study serves: conventional bank credit, USDA Business and Industry, and SBA lending under 7(a) or 504. The market, entitlement, cost and repayment work is common to every route; what changes is the program standard the report answers and the questions each lender adds, so the scope should name every lender who will read the report. With no SBA subdivision approval since FY2023, a conventional lender is a likely reader, and writing for that lender from the outset costs less than rewriting later.

Why did FY2021 have so many SBA land subdivision loans?

The page does not say, and a study should not guess. What the record does show is scale: FY2021 has 8 loans for $5.5 million, the highest count since FY2007's 19 and the largest printed annual total of the window. With counts this small, a single sizable approval can lift a whole year, so FY2021 may reflect a few large loans rather than a surge of subdivision lending; the table cannot tell the two apart. A study that cites FY2021 should cite it beside FY2024 to FY2026, when the count was 0, so the lender sees the whole cycle rather than its high point.

Does a land subdivision study cover entitlement and permitting risk?

Yes, and for subdivision it is often where the schedule is won or lost. The study sets out each approval the plat still needs, zoning, preliminary and final plat, utility capacity and impact fees, and dates each from the local record of recent approvals, because every month of delay adds interest, taxes and bond costs before a single lot closes. That timeline is what the lender sets against the 12.5% cancellation floor in the SBA record: a loan approved before its approvals are secure is a loan that may never fund, and the study makes that exposure visible before commitment.