SBA 504 Hotel Feasibility Study in Virginia

The SBA 504 book for hotels and motels in Virginia

The SBA 504 record for hotels and motels in Virginia runs to 55 loans and $144.7 million approved, counting FY2017 to FY2026 in Virginia. Half the Virginia loans sit at or below $2.6 million; the middle half of hotels and motels spans $1.3 million up to $3.6 million. Next to hotels and motels nationally under SBA 504, Virginia shows a median ratio of 1.26x, which puts Virginia above the national figure for hotels and motels. Brand systems matter for hotels and motels: the franchise share is 80.0% in Virginia.

For SBA 504 loans to hotels and motels, Virginia stands at rank 20 among states, while within Virginia the class ranks 3 of 39. FY2021 was the Virginia high point, 10 loans and $16.2 million together, and FY2026 lists 5 loans worth $14.7 million. Virginia hotel borrowers who choose 504 finance real estate through a development company beside a bank, a structure the 7(a) page does not show.

At the head of the Virginia holder list is Business Finance Group, Inc.: 25 loans and $65.0 million. Further Virginia holders include 504 Capital Corporation, which holds 20 loans valued at $52.9 million and Rappahannock Economic Development Corporation, which holds 6 loans valued at $20.8 million. Business Finance Group, Inc. heads Virginia's list in SBA's file on 55 loans: a record of hotels and motels loans held, rating no lender. The Virginia loans cluster in Chesapeake City, which has 6; Prince William has 6 and Stafford has 4. Further counts include Harrisonburg City 3, Shenandoah 3 and York 3.

Reading the outcome floors for Virginia hotels and motels

Within Virginia, FY2017 to FY2024 approvals report a cancellation floor of 15.9%, and as high as 27.3% if undisbursed loans count as cancelled. On losses, Virginia's funded group is too thin, and a Virginia blank is not a clean bill. Hotels and motels share one code in SBA's files, so Virginia lodging counts mix select-service and full-service houses without a way to separate them. Virginia bank loans that SBA never touched are not tabulated.

What a Virginia hotel study must prove

Occupancy and daily rate are different things, so the study should build revenue per available room from measured competitors near Chesapeake City, not from brand averages. Seasonality needs a month-by-month cash test, because payments on a loan near $2.6 million fall due in slow months as well as busy ones. Franchise terms, renovation plans and replacement reserves are costs that a loan figure hides. Labor is a large fixed cost, and a limited-service property has a different cost structure from a full-service one. Appraisers value hotels on income, so collateral rests on the same occupancy assumptions the forecast uses. Name the employers and venues that fill rooms, and test the plan without the weakest of them.