SBA 7(a) Hotel Feasibility Study in Texas

The nation's leading state for 7(a) hotel lending

Texas takes a rank of 1 among states for SBA 7(a) hotel and motel loans by count, with 1,178 loans and $3.30 billion approved from FY2017 to FY2026, while hotels sit 4 of 39 among Texas asset classes. The distinguishing metric is size: a median loan of $2.6 million is 1.20x the median of 7(a) hotel loans nationally, and the middle half runs from $1.6 million to $4.2 million. These are real-estate sized loans, and the franchise share of 74.4% means that most Texas hotel borrowers carry a brand.

Who holds the loans

Wallis Bank leads with 121 loans and $317.4 million, ahead of US Metro Bank with 77 and $260.2 million, Celtic Bank Corporation with 53 and $154.0 million, GBank with 49 and $163.2 million, and Bank of Hope with 49 and $148.3 million. SBA identifies the current holder of each loan, so the list describes books; it does not say what any institution requires. Harris County has 215 loans, Bexar 74, Dallas 62 and Tarrant 55, with Collin, Bell, Galveston, Travis, Denton and Fort Bend following.

Cohort floors

Cancellations after approval ran at 8.9% or more across FY2017 to FY2024 approvals, rising to 9.1% when undisbursed loans count as cancelled. Of the 592 loans disbursed in that earlier cohort, FY2017 to FY2021, 1.4% are charged off to date and 0.68% inside five years of approval. Both stay floors that can still rise, since open loans keep ageing.

Timing

Volume peaked at 207 loans and $569.4 million in FY2021, fell to 67 loans in FY2024, and recovered to 136 loans and $462.6 million in FY2026.

Coding limit and what the study tests

The hotel code covers motels too and merges limited-service with full-service properties, and the figures blend an economy motel with a larger branded hotel. A feasibility study for a Texas hotel financed under 7(a) has to test occupancy and daily rate against the competitive set and the demand drivers of the submarket. It must compare the project's cost per room to the loan sizes seen here, show coverage after franchise fees and reserves, and have the appraisal address the going-concern value that a hotel's income creates. A flag change or a franchise termination can alter revenue, so the downside case should include it.