SBA 504 Hotel Feasibility Study in Georgia

The leading 504 class in Georgia

Hotels and motels are the first-ranked class in Georgia under SBA 504, and the record is large: 144 loans from FY2017 to FY2026 for $396.7 million. Georgia places 4th among states by count for this program and class. The Georgia median of $2.6 million is 1.25x the 504 national figure for lodging, while the central half of loans spans $1.4 million to $4.1 million. Flagged hotels dominate; a franchise appears in 81.3% of loans. Taken together, that is a market where branded limited-service and select-service projects are routinely financed with fixed-asset money tied to the real estate.

Development companies behind the loans

Because 504 is delivered through certified development companies, the holders listed by SBA are mostly those and not banks. Florida Business Development Corporation tops the list with 47 loans worth $129.1 million, and next comes Capital Partners Certified Development Company, 37 loans and $103.7 million. Small Business Access Partners, Inc. has 17 loans for $44.7 million. Georgia Certified Development Corporation holds 15 for $50.5 million; the last of the five, Florida First Capital Finance Corporation, Inc., also has 15, for $47.2 million. It is notable that two Florida-based companies lead a Georgia list, so a sponsor should expect lending channels that cross state lines. By county, Chatham leads with 21 loans, ahead of Fulton at 13, Cobb and Gwinnett at 11 each, and DeKalb at 7.

Where the risk markers sit

The cancellation spread is wide here. Cancelled-after-approval loans make up at least 13.1% of the earlier approvals, and the ceiling climbs to 19.6% with undisbursed loans included, which suggests many lodging projects stalled before closing. Only 42 loans from the early years reached disbursement, and none of the rates for them has moved off 0.00%, whether measured to date or within five years. Treat that as a minimum, since open loans may yet fail. Volume has been uneven: 14 loans and $27.9 million in FY2017, a low of 4 loans and $3.7 million in FY2021, and a rebound to 13 loans and $52.3 million in FY2026.

Questions for the study

A lodging project under 504 needs a study that goes beyond demand. Chatham, the Atlanta-area counties and the smaller counties on the list are different markets, so the study must name the submarket and test demand generators such as airports, events, corporate travel and tourism, along with competing rooms. Project cost needs to be reconciled with a ticket near $2.6 million and the cash flow tested for coverage in a slow year, with a brand's property improvement plan included. The appraisal reviews the real estate and the going concern together. SBA codes every hotel and motel alike, with no split by service level, so the loans here can include several models of operation.