SBA 7(a) Hotel Feasibility Study in Indiana

An Indiana hotel record with very few cancellations

Hotels and motels hold the third place among 39 asset classes in Indiana, and Indiana ranks eighth of the states by count of such loans. SBA's file shows 316 approvals from FY2017 to FY2026, worth $748.4 million. This cell is defined by how seldom loans fall away. Cancellation is only 4.9% for approvals dated FY2017 to FY2024, and it is unchanged by including undisbursed loans. The 178 loans that funded in FY2017 through FY2021 carry no charge-offs at all: 0.00% so far, 0.00% by the fifth year. Floors both, so a zero is no guarantee.

A franchise market

Franchised properties account for 79.4% of loans, a very high share, and the median of $2.2 million is 1.00x the nationwide 7(a) figure. The middle half of loans runs from $1.4 million to $3.2 million, a narrow band. An Indiana borrower is therefore mostly buying or building a branded, limited-service property, financed at the national size.

Lenders and counties

GBank has 65 loans, Millennium Bank 41, Shoreham Bank 38, and Byline Bank 11. The list is of present holders in SBA's file, with no statement on how these lenders underwrite. Marion County has 52 loans, Lake 29, and Allen and Saint Joseph 23 each, then Elkhart 22, so the lending follows the interstate corridors and the northern industrial counties. Volume fell to 15 loans in FY2023 and has since come back to 30 loans in FY2024 and 26 in FY2026.

The coding limit

Because hotels and motels share a code, select-service and full-service properties are mixed, and an upscale project should not treat this record as its peer group.

What an Indiana hotel study has to test

Demand drivers come first: corporate accounts, manufacturing visitors, tournaments, universities, highway traffic and events. The study should show occupancy and average rate against the competitive set and the effect of the flag on both, with the franchise fee and the property improvement plan costed. Reserve for furniture and fixtures needs its own line. A loan near $2.2 million must be tested with debt service coverage on a weaker year, and the appraisal will rest on a going-concern income forecast that depends on those assumptions.