SBA 504 Hotel Feasibility Study in Alabama

Alabama's leading 504 class is lodging, and three quarters carry a flag

Hotel and motel is the number one class, 1 of 39, among Alabama's 504 loans. Of the 40 loans, 75.0% are franchised, and the total is $102.4 million. The midpoint of $2.5 million is 1.21x the national 504 hotel midpoint, with the middle half between $1.2 million and $3.7 million. Alabama ranks 25 among states by count. A brand-flagged limited-service hotel is the typical borrower, though the code cannot say so.

Four holders and the places they cover

Florida Business Development Corporation holds 13 loans worth $33.1 million, an out-of-state company. Southern Development Council holds 9 worth $30.2 million. Two more names tie at 8 loans: Birmingham Citywide Local Development Company, $17.7 million, and, in third place by dollars, Florida First Capital Finance Corporation, Inc. with $16.4 million. These are holders per SBA at present, and each loan sits with the company SBA lists. Madison and Mobile counties lead with 5 loans each, Jefferson and Montgomery have 4, and Lee and Shelby 3. FY2025 was the busiest year, with 9 loans worth $21.1 million, against 2 in FY2023 and FY2024.

What cannot be said

Alabama hotels have two blanks where rates would be: cancellation and charge-off both fall below SBA's cohort minimum, so how many approvals died or how many loans were lost remains unstated. The class also combines every property type under one hotels-and-motels code, with select-service and full-service stays indistinguishable, which means the loan size alone does not reveal what kind of hotel was financed.

What an Alabama hotel study has to show

Demand drivers set a hotel's fate. The study should identify them: interstate traffic, industry and military visitors, university and sports events, and weekday business travel in the larger cities. It should list competing rooms and the occupancy and rate levels they achieve, from a source the reader can trace. Because the brand matters here, state the franchise's fees, required renovations and property improvement plan against the rate premium the flag brings. Construction cost per key, furniture and equipment, and the soft costs of opening should be itemised. Run the payment at stabilised occupancy and again with weaker months, because room revenue drops quickly. Appraisers tend to value a hotel as a business, so add a figure for the bare real estate with the flag taken away.