SBA 504 Hotel Feasibility Study in Indiana

A franchise-heavy 504 class in Indiana

Hotels and motels financed under SBA 504 in Indiana are overwhelmingly branded properties. Counting 61 approvals across the ten fiscal years, with $118.9 million in gross dollars, the franchise share is 75.4%, a figure that shapes how a study for this class must be built. Hotels also rank second among the 39 classes in Indiana, a high place for a single lodging code, although the state sits only at 18 among states for 504 hotel lending by count. The median loan of $1.6 million stands at 0.79x the nationwide 504 figure for hotels, so Indiana's typical project is smaller than the national one even though the middle half, from $965,000 to $2.4 million, covers most of the range a borrower would expect. No basis for distinctness is recorded for this cell, which means the class is described by its rank and franchise share rather than a single outlying ratio.

The development companies

In the 504 program the lender table lists development companies as SBA reports their current holdings. Premier Capital Corporation shows 22 loans and $41.4 million, Indiana Statewide Certified Development Corporation shows 20 loans and $45.1 million, the larger dollar total, and Regional Development Company 9 loans and $17.1 million. Marion County leads the map with 8 loans, followed by Lake with 7 and Vanderburgh with 6, then Hendricks with 4. Approvals were uneven: 13 loans and $22.3 million in FY2017, only 2 loans and $7.4 million in FY2023, then 10 loans and $21.1 million in FY2024 and 7 loans and $20.7 million in FY2026.

Hotel approvals in the FY2017 to FY2024 window were withdrawn or cancelled at no less than 14.0%, or 18.0% when undisbursed loans are counted as cancelled. These sit among the higher cancellation figures for a hotel class, and a lender can take them as a prompt to remember that approval does not guarantee a funded project. The loss rate on charge-offs is held back for Indiana hotels, because the group of early funded loans is too small for a rate to mean anything, so this page gives no number for it and does not suggest losses were absent.

Testing an Indiana hotel

Lodging arrives as a single category here, with limited service and full service blurred together in these figures. A study must therefore choose its own comparison set: the flagged competitors in the project's submarket, their rate and occupancy history, and the drivers of the room nights, whether business travel, events or highway traffic. A franchise agreement brings brand standards and a property improvement plan, and the cost of both belongs in the budget. Run debt service coverage on a stabilised year and on a downside year, because hotel income moves faster than a lease. An appraiser will treat the going concern as the asset, so the study ought to pull apart the worth of the real estate, the flag and the operating business.