SBA 7(a) Hotel Feasibility Study in Minnesota

Very small hotel loans

Minnesota's SBA 7(a) hotel and motel loans total 81 and $98.4 million in gross dollars, so the state ranks 31st for the pairing, and lodging holds the 12 of 39 spot among its classes. The median stands out by a wide margin: $700,000 is only 0.32x the national 7(a) median for hotels, and the central loans span $150,000 up to $2.1 million. This is a different product from the large flagged-hotel loan seen in other states. Brands appear on 35.8% of loans, a minority, so independent and small lodging operators set the tone.

GBank, Northeast Entrepreneur Fund, Inc. and BankVista each hold 6 loans, with The Citizens National Bank of Park Rapids at 5. These are holders in SBA's file and do not describe how any institution decides. Saint Louis County leads with 13 loans, ahead of Crow Wing and Kandiyohi with 6 each and Hubbard with 4. The pattern is a few regional counties rather than the metro core. Volume peaked at 15 loans and $17.3 million in FY2021 and fell to 3 loans and $2.4 million in FY2025 before reaching 12 loans and $26.4 million in FY2026.

Floors

The cancelled share has a floor of 7.6% and a matching ceiling. Looking at 42 loans that went on to fund, charge-offs reached a floor of 2.4% so far and 2.4% again at year five. Open loans keep both as minimums. Neither measure cleared our margin against Minnesota overall or hotels nationally, so the median is what separates this cell.

Coding limits and what a Minnesota study must prove

Because the industry code covers hotels and motels together, limited-service and full-service lodging cannot be told apart. A Minnesota study should therefore define the property: rooms, brand or independent status, and the guest it expects. Resort and lake markets are seasonal, so monthly occupancy and rate should be modelled, with a slow shoulder season. Test the competing supply nearby, the cost of building or renovating against the small loans typical here, and staffing in a thin labor market. Make sure coverage of the debt holds through a weak summer. The appraiser will value the going concern, so revenue per available room needs support.