SBA 7(a) Hotel Feasibility Study in Georgia

Big loans, mostly flagged hotels

Georgia stands third nationally for hotel and motel loans under SBA 7(a), counted by loans, and third of 39 inside its own mix. Approvals from FY2017 to FY2026 reached 573 loans totalling $1.45 billion in gross dollars. Typical borrowing is enormous beside other classes: a median loan of $2.3 million, with the middle half running from $1.3 million to $3.6 million, or 1.04x the class median nationwide. Branded properties dominate, since 76.1% of loans carry a franchise flag. The size and the flag together tell a borrower that this lending finances flagged limited-service and select-service properties as much as independent inns.

Lenders and counties

HomeTrust Bank holds 67 loans worth $161.7 million. GBank holds 55 worth $163.8 million, Embassy National Bank 54 worth $98.1 million, Metro City Bank 38 worth $95.7 million and PromiseOne Bank 35 worth $78.1 million. Dollars per loan are therefore high everywhere, and GBank has the largest total on the fewest loans among the first three. Each row is SBA's record of loans a bank holds or held, so none of it describes lending policy. Fulton County has 53 loans, Chatham 39, DeKalb 32, Cobb 27 and Henry 25. Bibb and Glynn counties show that hotel lending reaches well beyond Atlanta. Volume peaked at 96 in FY2021 and has hovered near 40 a year since FY2023.

Outcomes on 330 funded loans

Cancellation after approval reached at least 8.8% of FY2017 to FY2024 approvals, and the figure stays at 8.8% if undisbursed loans are counted as cancelled. Within the 330 loans funded by FY2021, the charge-off rate to date prints as 0.00%, and so does the five-year measure. A printed floor is no guarantee: loans still open can fail, and hotels are cyclical.

One code covers every kind of hotel

SBA files every hotel and motel under one industry code, which hides the difference between a limited-service inn, a select-service hotel and a convention property.

What the study must settle

SBA 7(a) is a general-purpose guarantee, so the study should state whether the loan buys a property, converts one, or funds renovation required by a brand. Georgia hotel cases usually turn on a handful of tests: occupancy and average rate supported by demand drivers within reach, such as airports, convention space and industry; competing supply, including rooms under construction; and the brand's property improvement plan, which can add cost after opening. Because tickets are very large, debt service coverage should be stressed against a drop in occupancy. An appraiser values a hotel on its cash flow, and the franchise agreement affects that cash flow through fees and standards.