SBA 504 Hotel Feasibility Study in Massachusetts

Massachusetts hotels under 504: a Cape-heavy map and development companies from New England

Hotels and motels rank fourth among Massachusetts asset classes in SBA 504 lending, while the state is 17 among states. The cell recorded 68 loans worth $140.6 million for FY2017 to FY2026. A $1.5 million median is 0.73x of the national 504 reading, and the central loans run from $601,000 to $3.6 million. Franchise brands appear on 30.9% of loans. Barnstable County, the Cape, has 27 loans, ahead of Berkshire with 9, Worcester with 7, and Bristol, Essex and Plymouth with 4 each, which makes this a resort-and-leisure book more than a city one.

The development companies

Sixteen loans each are credited to Granite State Economic Development Corporation ($35.6 million) and Bay Colony Development Corporation ($24.2 million). New England Certified Development Corporation has 14 worth $41.1 million, the largest dollars of the group, and Cape & Islands Community Development, Inc. has 14 worth $14.7 million. The page reports whichever organisation SBA shows against each loan, nothing about how they work. The yearly path is irregular: 16 loans and $26.1 million in FY2017, only 4 loans and $3.9 million in FY2019, 9 loans and $26.4 million in FY2023, and a lone $5.0 million loan in FY2026.

A heavy cancellation floor

At least 17.5% of approvals through FY2024 were cancelled, and 23.8% if undisbursed loans are counted, meaning many approved hotel plans never funded. None of the 33 loans funded early has been charged off, leaving the charge-off floor at 0.00% today and again across five years. Loans still open keep these as floors.

The industry code puts hotels and motels together. A Massachusetts project must therefore say whether it is a select-service inn, a full-service hotel or a seasonal motel, since the record cannot.

A study for a Massachusetts hotel under a 504 structure must prove a business and a property. Seasonality is the central issue on the Cape and in the Berkshires, so monthly occupancy and room rate need to come from comparable properties, with winter months shown and a seasonal staffing plan. Franchise fees, brand standards and any required renovation belong in the costs. Local permitting, zoning and conservation rules can delay a hotel, and the study should say where approvals stand, given how many approved plans here lapse. Coverage must hold at lower occupancy. The appraisal will value land, building and going concern, and the study's projections should reconcile with it. Nothing here implies approval.