SBA 7(a) Hotel Feasibility Study in Arkansas

Arkansas hotels: large loans, brand-heavy, few cancellations

Third on Arkansas's list of financed industries under 7(a), hotels and motels are made up of large loans, most of them branded. The file holds 90 loans approved in FY2017 to FY2026, $173.7 million in gross dollars, a median of $1.7 million and a middle half running from $1.2 million to $2.7 million. The median is 0.75x the national hotel figure, and that figure is what marks this cell off from Arkansas overall. Franchise brands are on 76.7% of loans. Arkansas is 29th among states by count for the class, so the dollar totals are heavy relative to its place in the national table.

The holders and the state's geography

GBank holds 7 loans, with Readycap Lending, LLC, Peoples Bank and, last, The Huntington National Bank each at 5; these are the present holders in SBA's data. Pulaski County, which includes Little Rock, accounts for 25 of the loans, Miller County has 7 and Saint Francis 5, while Benton, Carroll, Clark, Faulkner and Sebastian have 4 each. Annual counts swing widely: 18 loans and $29.8 million in FY2021, only 3 in FY2025, and 13 loans worth $30.4 million in FY2026.

Low cancellation, mixed charge-off

Hotel loans approved in Arkansas during FY2017 to FY2024 saw cancellation of 2.7% or more, with the ceiling equal. Looking at 45 mature Arkansas hotel loans, the charge-off floor is 4.4% overall with 0.00% inside five years of approval, so whatever losses exist appeared late in the loans' lives. As floors, they will not fall, and open loans can raise them.

Arkansas hotel study: what must be proven

Begin with where the guests come from: highway traffic, business travel to the capital, medical or university stays, tourism, a nearby employer. Occupancy and daily rate for the proposed property have to be built from comparable hotels in the same market and season. The franchise brand's fees, required renovations and competition within its own system should be in the budget. A hotel at the median costs around $1.7 million and one near the top of the middle half more than $2.7 million, so the study must itemize land, building, and furniture. Debt service has to be met at the occupancy a newly opened Arkansas hotel really reaches early on, not at a stabilised figure. Motels and hotels are filed under one industry code, which blocks any split of limited service from full service in these figures.