SBA 7(a) Hotel Feasibility Study in Kansas

Kansas hotels: big loans, heavy branding

Hotels and motels are the third-largest class in Kansas SBA lending, and they look unlike most of the 7(a) book. From FY2017 to FY2026 SBA approved 105 such loans worth $189.9 million, a large dollar total for the count. The median of $1.5 million is 0.69x the national hotel median, and that figure is what separates Kansas hotels from the state's all-class record: loans are smaller than the national hotel norm yet still large in absolute terms. The middle half runs from $744,400 to $2.4 million. Franchise flags appear on 67.6% of loans, so most Kansas hotel borrowers operate under a national brand. Kansas places 27 among states for hotel and motel loans by count.

Who holds the Kansas hotel paper

The leading holders are Shoreham Bank and Bank of Hope with 8 loans each, then GBank with 7, and US Metro Bank rounds out the leaders at 5. They are SBA's current holders, so the borrower's home market need not be the holder's. Sedgwick County, around Wichita, has 19 loans, Thomas County 8 and Johnson County 7, with Ellis, Ford, Logan and Shawnee at 5 each. The number of loans per year was between 5 and 18, but dollars were highest in FY2024 at $40.9 million on 18 loans and $34.1 million on 17 loans in FY2026.

Cancellation and charge-off floors

Kansas hotel approvals from the FY2017 to FY2024 span lost at least 11.4% to cancellation, a figure that stays the same if undisbursed loans are added. Of the 37 loans in the seasoned cohort, charge-offs are at least 2.7% overall, though 0.00% on the five-year view, so whatever loss exists came after the fifth year. A cohort of 37 is small. Open loans can still change that picture.

Questions a Kansas hotel study has to answer

A hotel study lives or dies on demand drivers that are specific to the town: interstate traffic, a hospital, a college, an energy or farm customer, a stadium. Occupancy and rate should be built from comparable properties in the same market, season by season, and the franchise's fees and required renovation schedule must be in the budget. With a median near $1.5 million and an upper quarter beyond $2.4 million, cost per room and the split between land, building and furniture should be shown. The payment must be covered at the occupancy a new or reflagged property reaches in its first years, and the valuation has to rest on the hotel's net income. One coding limit applies: a lone industry code covers motels and hotels alike, which prevents any split between limited service and full service.