SBA 7(a) Hotel Feasibility Study in Colorado

Colorado hotels: large loans, light losses

Colorado's hotel and motel loans under 7(a) are big and have performed well. The file for FY2017 to FY2026 holds 272 loans worth $591.5 million, a median of $1.9 million and a central half running from $1.1 million to $3.1 million. That median is 0.87x what hotels borrow nationally under the program. Colorado ranks tenth among states by count, and across Colorado's 39 classes hotels hold sixth. Franchise share is 49.3%, about half of the loans.

A clean loss record

Colorado hotel approvals made from FY2017 to FY2024 lapsed at 7.5% or more, identical once undisbursed loans are counted. Among 148 loans disbursed in FY2017 to FY2021, 2.0% are charged off to date, and in the first five years after approval the charged-off share is 0.00%. These are minimums, and they are low, yet they should be read with caution in a cyclical sector exposed to travel demand.

Not the mountains: El Paso, Adams, Pueblo

The county table is surprising. El Paso County, around Colorado Springs, leads with 41 loans, ahead of Adams with 25, Pueblo with 23, Jefferson with 22 and Denver with 21. Weld has 17, Lincoln 14, Arapahoe 11, Larimer 8 and Mesa 7. The record belongs to highway and city-edge properties on the Front Range and the plains rather than resort towns. Approvals ran at 36 in FY2017 and fell to 15 in FY2023, then rose to 27 in FY2026.

Lenders and the coding limit

Bank of Hope holds 43 loans worth $87.8 million, Open Bank 39 worth $88.5 million, Hanmi Bank 38 worth $73.9 million, PromiseOne Bank 21 worth $47.9 million and PCB Bank 18 worth $35.1 million. They show portfolios, not credit standards. The 272 loans cannot be split between limited-service and full-service properties, since hotels and motels are filed under one code.

Segments, flags and seasons

A Colorado hotel study must test demand segments: business, leisure, group and the drive-in traveller on the interstate, and the share each brings across seasons. Project occupancy, average daily rate and revenue per available room through a slow ramp-up, with comparables from the actual competitive set. If a flag is involved, franchise fees, the property improvement plan and reservation fees come off revenue. Colorado's weather and tourism swings affect the monthly cash flow. A loan near the $1.9 million median may fit an existing property, whereas a ground-up hotel will exceed $3.1 million and needs a separate justification. The ability to repay must hold on occupancy well below the stabilised case, and the appraiser will rest the value on net income.