SBA 504 Hotel Feasibility Study in Illinois

Illinois lodging under 504

Hotels and motels are fifth of 39 classes in Illinois for SBA 504, with 81 loans approved from FY2017 to FY2026 worth $174.3 million. The state is 11th by count. A median of $2.2 million is 1.08x the national figure, so the loan size is close to the norm, and the central half runs from $897,000 to $2.6 million. Brands are overwhelmingly the model: 81.5% of the loans carry a franchise.

A development-company file

One name dominates the holders: SomerCor 504, Inc. has 45 loans worth $100.9 million, more than half the total and more than three times the next name. Wessex 504 Corporation follows with 13 loans and $28.9 million, and Small Business Growth Corporation with 11 and $21.8 million. A hotel sponsor in Illinois is therefore working with a small number of channels. Cook County leads the counties with 17 loans. Will has 10, Kane 8, DuPage 7, Lake 6, DeKalb 4, and Champaign and Madison 3 each. Collar counties together outweigh Chicago itself.

Cancellation is the weak point

The cancellation range is wide. At least 15.9% of the earlier approvals were cancelled, and the ceiling is 23.2% once loans never disbursed are counted, the highest ceiling on these pages. Many Illinois lodging projects, in short, never closed or never drew. Only 36 early Illinois loans reached funding, with 0.00% charge-off by both measures, and any loan still open could move that floor. Annual approvals fell from 11 loans and $20.1 million in FY2017 to 7 and $13.5 million in FY2021 and 6 and $10.9 million in FY2026.

What a study for an Illinois hotel must test

A 504 lodging study carries the burden of explaining why a project that reaches approval will also reach completion. That means a site with control, entitlements and a franchise application in hand, a construction budget with contingencies, and a lease-up schedule that shows the property funding its debt before it stabilizes. Demand needs to be tied to named generators such as an airport, a medical center, a corporate cluster or an interstate, with the rooms already serving them. The budget should reconcile with a ticket near $2.2 million. SBA files every hotel and motel in one category, which blurs select-service against full-service projects, and the appraisal values land and operation together.