SBA 7(a) Hotel Feasibility Study in Iowa

Iowa lodging: smaller than the national class

Lodging in Iowa borrows at 0.71x the national reading. A $1.6 million median sits inside a central half from $913,125 to $2.2 million, and 68 approvals between FY2017 and FY2026 come to $110.0 million. Lodging is fourth of 39 classes in Iowa and the state is 32nd by count. Brands appear in 69.1% of loans, so a flagged property is the norm in this file and an unflagged one is the exception that needs a stronger case.

Clinton County and a short list of holders

Clinton County leads with 7 loans, Linn has 5, Des Moines, Dubuque and Polk 4 each, and Black Hawk, Ida, Marshall and Pottawattamie 3 each. Des Moines and Polk, the two usual centers, are not the leaders, so lodging loans follow river and highway towns. GBank has 8 loans for $17.9 million, Shoreham Bank 6 for $11.0 million, and United Bank of Iowa 5 for $5.5 million. The first two have very large average tickets.

Outcome floors

Cancellation after approval is floored at 9.1%, and the ceiling matches it. Iowa's 34 early funded loans show 0.00% charged off on both measures, a floor and nothing firmer. In a small market a single lost employer or closed facility can move results, and open loans have time to show it. Yearly flow was 9 loans and $20.5 million in FY2017, 11 and $14.3 million in FY2021, and 6 and $11.9 million in FY2026.

A study for an Iowa hotel

Iowa lodging depends on identifiable demand generators, and the study should name them: a university, a medical center, a manufacturer, an interstate exit, a riverfront or an event venue. It should test the existing rooms serving them, occupancy and rate by season, and the cost of construction or acquisition set against a loan near $1.6 million. Brand requirements and renovation reserves belong in the budget. With the median below the national class, a sponsor proposing a much larger project should explain why. No split between select-service and full-service rooms exists in SBA's coding, which is why the page treats every hotel and motel as one group; and an appraiser will treat the property as a going concern, which tests every assumption behind the forecast.