SBA 7(a) Hospital Feasibility Study

Hospital loans that are not hospital buildings

Across FY2017 to FY2026 the 7(a) hospital class holds 231 loans, $131.4 million in all, and the median is $200,000, with the middle half running only from $50,000 to $499,050. By year the record opens at 30 loans and $15.9 million in FY2017, drops to 13 loans and $8.4 million in FY2020, peaks at 34 loans and $14.7 million in FY2025, and ends at 19 loans and $7.4 million in FY2026.

Critical access hospitals have no code of their own and cannot be separated from the rest. The Huntington National Bank leads the lenders with 28 loans and $8.0 million; Wells Fargo Bank National Association has 21 loans for only $1.5 million, Northeast Bank 14 for $2.8 million, Manufacturers and Traders Trust Company 10 for $715,000 and Celtic Bank Corporation 8 for $5.8 million. California has 26 loans, Ohio 24, and Florida and Texas 22 each. Annual counts have bounced between 13 and 34, the high coming in FY2025. Michigan has 9 loans, Georgia, Illinois and North Carolina 8 each, and Colorado and Washington 7 each, so the geography is spread and no state holds more than 26 of the 231 loans. Franchise share is 3.5%.

Floors for a small cohort

Cancellations take at least 14.0% of FY2017 to FY2024 approvals, at most 14.6%. Among the 96 hospital-class loans that disbursed in FY2017 to FY2021, at least 4.2% ended in charge-off, but only 1.0% inside five years, so most losses arrived after the fifth year, and a study should test the full term of the loan rather than its first years. With 96 loans in the loss cohort, the rates are a record of past loans, not a state-level finding.

What a hospital-class study must test

Start with what the borrower actually does, because the industry code alone does not say what the loan buys; service-line detail belongs up front. A feasibility study for a 7(a) loan in this class has to test demand for the specific service line, whether diagnostics, outpatient procedures or inpatient beds, against the referral base and competing providers; the cost of equipment and space; debt service coverage from revenue adjusted for payer mix, with a reimbursement cut tested; and, where real estate is pledged, an appraisal of the building as general medical space.