SBA 504 Hotel Feasibility Study in Colorado

Colorado hotels: brand-affiliated, and priced at the national midpoint

Hotels and motels hold second place among Colorado's asset classes at 2 of 39, and the state ranks 8 among states for SBA 504 lodging loans. Between FY2017 and FY2026 SBA approved 94 of them, worth $213.9 million. The median is $2.0 million, a ratio of 0.98x to the 504 midpoint nationwide, so the typical loan sits right at the national figure, and the central half runs from $1.2 million to $3.1 million. Franchised properties account for 62.8% of the loans.

The lenders behind the second loan

B:Side Capital holds 55 of the loans, worth $110.9 million, most of the state's book. Pikes Peak Regional Development Corporation holds 18 for $40.7 million, Mountain West Small Business Finance 9 for $29.3 million, Community Economic Development Company of Colorado 7 for $14.8 million, and Preferred Lending Partners 5 for $18.2 million. Each is a certified development company, an entity type that arranges second loans in this program. The rows show present holders and make no claim about their terms. El Paso County leads with 18 loans, then Larimer with 15, Adams and Jefferson with 8 each, and Arapahoe and Mesa with 7.

Outcomes and timing

The cancellation floor is 9.6%, with a ceiling of 12.0%. Colorado's 48 funded early-cohort loans show 2.1% charged off to date against 0.00% by year five, so any losses came after year five. Open loans can still fail, making each a minimum. Dollar volume has stayed relatively steady, reaching $29.2 million in FY2022 and $26.8 million in FY2020, with $14.7 million in FY2025.

Tests the Colorado lodging plan must pass

Since most Colorado borrowers carry a brand, the study should start with the franchisor: its fee schedule, its property-improvement requirements and the territory protections, all weighed against projected revenue per available room. One industry code covers every hotel and motel, so limited-service and full-service projects cannot be separated here, and the proposal must define its own product. Demand work should reflect the real driver at the site: seasonal use, business travel, events, or highway traffic. Seasonality matters, so the forecast should be built month by month, with the payment covered even through the weakest quarter. Costs include furniture, fixtures and equipment, and a reserve for brand-mandated renovations. The appraisal values a going business, so average rate and occupancy assumptions need support from comparable properties, and a loan far above the middle of the range should be justified by the size or quality of the plan.