SBA 504 Hotel Feasibility Study in Arizona

Arizona's top 504 class, at national scale

Lodging sits first of 39 among the classes Arizona finances through SBA 504, and that dominance, together with sheer size, defines the cell. The state posted 87 hotel approvals totalling $208.1 million over the ten years, placing it 9 among states. The median of $2.1 million is 1.05x of the nationwide 504 median, essentially in line, while the inner half of loans runs $1.2 million up to $3.3 million. Franchise flags appear on 66.7% of loans, so brand standards touch most of the book.

Three sponsors dominate

The Mortgage Capital Development Corporation sponsored 42 loans worth $102.2 million. Arizona Capital Source handled 28 loans worth $67.3 million, and CDC Small Business Finance Corp. 12 worth $25.6 million. What the table reflects is SBA's file of sponsors, which measures no company's approach. By county, Maricopa has 26, Pima 13, and Coconino and Yavapai 11 each, so the book is not confined to the Phoenix or Tucson areas. Mohave has 6 and Navajo 4. Because three sponsors carry so much of the book, a borrower can learn a good deal about timelines and documentation from them, and a lender reading the study may want to see which sponsor is expected to handle the loan and how it fits the project's schedule. The overall pattern, a large-ticket lodging class with a clean early record, is encouraging but not a prediction for any single project.

Floors on cancellation and charge-offs

Cancellations took at least 10.0% of the earlier approvals and as much as 14.3% on the stricter count. The 30-loan early cohort records 0.00% charged off on either clock, though so small a group proves little and loans still open keep this as a minimum.

What a study for an Arizona hotel has to test

Demand patterns differ by place within Arizona, and the monthly occupancy and rate should be those of the specific market, not a statewide guess, with debt service covered in the weakest months. Competing supply and new rooms under construction deserve a count, as does the mix of leisure, group and business demand. A franchised project must include brand fees, required improvements and reserves for furniture replacement. The 504 structure ties the loan to the building and land, an appraisal must therefore back the value of the site, and large tickets call for a clear cost-per-room case. On classification, lodging is one industry bucket here, which hides any difference between limited-service and full-service hotels.