SBA 7(a) Hotel Feasibility Study in Virginia

Virginia hotels under 7(a): franchised and rarely lost

Hotels and motels are the fourth-ranked class in Virginia, and under 7(a) the state places 15 among states, with 204 approvals across FY2017 to FY2026 worth $540.8 million. The cell is defined by franchising, which reaches 82.4% of loans, so a hotel loan here is nearly always a branded property with a franchise agreement behind it. The median loan of $2.4 million is 1.10x the nationwide benchmark, and the inner band of approvals reaches from $1.4 million to $3.9 million.

One bank dominates

GBank holds 58 loans worth $161.3 million, a commanding lead. The Huntington National Bank is second at 18 loans and $52.4 million. Peoples Bank has 11 loans and $35.1 million, and US Metro Bank closes the list with 9 and $17.4 million. Such concentration means a borrower in the state should expect a small circle of experienced hotel lenders. SBA names the present or past holder, and the table is no guide to underwriting. Wythe County leads with 17 loans, followed by Chesterfield and Henrico with 9 each, Fairfax and York with 7 each, Danville city, Halifax and Newport News city with 6 each, Prince Edward 5 and Frederick 4. Those are not the largest cities, which points to highway lodging.

Cancellation and charge-off

Hotel approvals through FY2024 show a cancelled floor of 5.8%, with an identical ceiling. Among 104 loans from the early funded cohort, charge-offs print as 0.00% both so far and at the five-year mark. A clean cohort is welcome, but hotel risk tends to show up in downturns, and floors on open loans can only rise.

What a Virginia hotel study must test

Start with the franchise: brand standards, property improvement plans, fees as a share of revenue, and the territorial protection on offer. Estimate occupancy, rate per night and room revenue for the specific location, test them against hotels already open or approved nearby, and separate leisure, business and highway demand. Compare cost with a ticket near $2.4 million, and run debt service coverage through a downturn year. The appraisal values the hotel as an operating business under an income approach, with the real estate inside it.

A single code groups hotels with motels, which hides any split between limited-service and full-service properties.