SBA 7(a) Hotel Feasibility Study in Kentucky

Kentucky hotels: franchise-dominated and large

Hotel and motel lending in Kentucky is a franchise story. Of the 104 loans approved under 7(a) across FY2017 to FY2026, 83.7% carry a franchise, so almost every borrower is operating under a brand's flag, standards and reservation system. The loans total $247.8 million, with a median of $2.0 million, an interquartile span from $1.5 million to $3.2 million, and a ratio of 0.91x to the nationwide median for the pairing. Kentucky is 28 by loan count, yet hotels stand 4 of 39 inside the state. On no measure do we find Kentucky clearly different from either parent.

A small set of holders

GBank holds 22 loans and $57.1 million, Peoples Bank 11 and $28.0 million. The holder named is the one SBA's records show today, which can differ from the original lender, so this ranking describes who holds the paper now. Boone and Jefferson counties each have 9 loans, McCracken 8, Fayette and Kenton 6 each, and Hardin, Laurel, Madison and Oldham 5. Volume peaked in FY2021 with 19 loans and $48.9 million, matching FY2017's 19 loans, and FY2026 shows 5 loans and $23.6 million.

For Kentucky hotel approvals dated FY2017 through FY2024, the floor for cancellation is 9.2%, with no higher ceiling. Across the 59 loans that funded from FY2017 to FY2021, no charge-off has been recorded: 0.00% to date, 0.00% within five years. Recent history is no guarantee, because lodging cash flow is sensitive to travel demand, and the rates are floors.

Testing a Kentucky lodging request

One industry code spans hotels and motels alike, which blends limited-service with full-service properties in this record, even though their economics differ sharply. A Kentucky study must therefore name the property type and test it against its own competitive set: how comparable properties fare on occupancy, daily rate and revenue per available room, the brand's performance requirements and renovation obligations, and the demand drivers near the site, whether business travel, tourism or highway traffic. Seasonality belongs in the monthly cash plan, not an annual average. With loans in the millions, the lender will need coverage tested at lower occupancy than the base case and an appraisal that separates real estate value from franchise and furniture value. A lender reading the study should look for the sponsor's operating record with the same brand or a similar property, since an unproven hotel operator is the weakest link in a loan of this size.