SBA 504 Charter School Feasibility Study

Large loans for school buildings

The 504 record for the charter school class holds 315 loans and $439.5 million from FY2017 to FY2026, and its median loan of $1.2 million is the measure that sets it apart. Our screen finds that median clear of both parents: the 504 program across all asset classes, and this school class across both SBA programs, where the typical loan is well smaller. The middle half of loans sits between $589,000 and $1.9 million, the range of an owned campus or a substantial building purchase. Volume has risen: approvals went from 20 in FY2017 to 53 in FY2024, the peak year at $97.7 million, before easing to 47 in FY2025 and 30 in FY2026.

Who is actually borrowing

The class carries a large caveat. Charter schools cannot be separated from private schools, which share the same industry code, and most charter schools are nonprofits that SBA does not lend to. So this record mostly describes for-profit schools and the for-profit operators behind them, not the typical charter. A franchise share of 17.5% says branded school systems appear among the borrowers. Florida Business Development Corporation leads the CDCs with 24 loans and $32.5 million; Capital Certified Development Corporation follows with 23 loans and a larger $44.7 million, then a tie at 15 loans: Florida First Capital Finance Corporation, Inc. carries $16.7 million of them and The Mortgage Capital Development Corporation $30.4 million; Mountain West Small Business Finance closes the list, its 14 loans totalling $13.3 million. California leads with 56 loans, Texas has 44, Florida 43 and Utah 18.

Cancellation after approval is at least 10.1% for FY2017 to FY2024 approvals, and as high as 16.8% if loans still undisbursed are counted as cancelled; the gap between those is wide, so a fair share of recent approvals had not funded when SBA's file was cut. Of the 97 school loans that disbursed over FY2017 to FY2021, none has reached charge-off: both the floor and the five-year rate stand at 0.00%. A small cohort and a floor of zero mean no recorded losses yet, which a lender should not read as no risk: school buildings are special-purpose, and a loss on one can be large when it comes.

A school study has to test enrollment first

For a lender, the central question is whether the school can fill the building it is buying. A feasibility study for a 504 school project has to test demand through enrollment history, waitlists and the seats offered nearby by district, charter and private schools; cost, including renovation to meet school building codes; debt service coverage from tuition or per-pupil funding at the enrollment the school has proven, not the enrollment it hopes for; and the appraisal, where a school building has few alternative users, so the MAI must state both its market value as a school and what it would bring from a buyer converting it to another use.