SBA 7(a) Life Science Lab Feasibility Study

Research businesses, not lab buildings

The 7(a) life science class records 292 loans and $143.4 million from FY2017 to FY2026, but its limitation matters more than usual: the code identifies a research business, not a lab building, and it also holds research outside the life sciences. The loans look like it. The median is $235,000, and the middle half runs from $83,000 to $500,000, working capital and equipment sizes, not the cost of a wet lab. Nothing here clears our distinctness margin against the 7(a) program or the class across both programs.

Newtek Bank, National Association leads the lender table with 24 loans and $15.0 million. Wells Fargo Bank National Association has 23 loans for just $1.1 million, The Huntington National Bank 21 for $5.3 million, and both TD Bank, National Association ($1.6 million) and JPMorgan Chase Bank, National Association ($3.2 million) have 11 each. California has 36 loans, Florida and Massachusetts 27 each, Texas 24 and Ohio 17. Volume rose from 17 loans in FY2018 to 51 in FY2025, and FY2026 brought the top dollar year at $24.3 million. Franchise share is 1.0%.

Early losses

Cancellation sits at 11.0% at minimum and 12.4% at most. Of the 108 research loans that funded in FY2017 to FY2021, 3.7% or more were charged off, 2.8% inside five years, so most losses came early, which fits businesses whose revenue depends on grants, contracts or a product that may not reach market. A borrower should expect a lender to look past the research label to the customer list and the signed contracts behind it.

What a research business study must test

A feasibility study behind a 7(a) loan here has to test where revenue comes from, whether contract research, grants, product sales or milestone payments, and how concentrated it is in a few clients; the cost of equipment and lab fit-out, which may be specialized and hard to resell; debt service coverage from contracted revenue rather than pipeline; and, if a building is part of the deal, an appraisal of the lab or flex space that tests demand from other research tenants. For a lender, the study's job is to separate a business with paying customers from one still spending toward its first.