SBA 504 Hotel Feasibility Study in Minnesota

Hotel loans at less than half the national scale

Minnesota hotels and motels took 101 SBA 504 loans worth $128.9 million in gross dollars between FY2017 and FY2026, so Minnesota is 6th among states, and lodging is its 3 of 39 class. Our test singled out the median, $893,000, only 0.44x the national 504 median. The central loans run from $577,000 to $1.6 million, and brands are on 59.4% of them. The properties financed are typically small, many probably limited-service or independent inns outside the major markets.

Holding 45 loans, Midwest Business Finance Corporation leads. Amplio has 21. The Twin Cities-Metro company has 16, the Southeastern Minnesota corporation 8, and Dakota Business Finance 5. These are current-holder records from SBA, not assessments of any company. The county list fits a state of tourism corridors: Hennepin has 9 loans, Saint Louis 7, and Crow Wing, Dakota and Stearns have 5 each, while Cass and Douglas hold 4 apiece. Lake County in the north records 3. Volume has swung from 16 loans and $21.3 million in FY2022 to 6 in FY2023, and 12 loans and $23.4 million in FY2025.

Floors

Cancellation takes at least 12.8% of approvals, climbing to 15.4% if undisbursed loans join the count. Looking at the 41 funded loans, charge-offs show a floor of 0.00% today and at the five-year mark. As a floor from a modest cohort, it records no charge-off yet and does not predict one. Cancellation is the metric to press on: a meaningful share of approved projects never closed.

What a Minnesota 504 hotel study must prove

The lodging code lumps hotels with motels, so the cell cannot tell a limited-service inn from a full-service one, and its brands are blended too. The study should pick the product and test seasonality, which is severe for a northern lake or resort market, along with business travel, events and group base. Because 504 finances the real estate, the property's value as a hotel must be shown against cost, with a realistic view of resale if the brand leaves. Brand fees and any required renovation belong in the model. Debt service must be covered on both loan pieces once occupancy has stabilised, and again in a slow winter, with the brand's required property improvements shown as a dated cash outlay rather than a footnote.