SBA 7(a) Manufactured Housing Community Feasibility Study

Manufactured housing: a record that stopped

Manufactured housing communities took 302 SBA 7(a) loans worth $269.7 million from FY2017 to FY2026, but nearly all of that came early. Approvals peaked at 70 loans and $75.1 million in FY2021, fell to 32 in FY2023, then to 5 loans and $6.9 million in FY2024, 0 in FY2025 and 4 loans and $729,000 in FY2026. SBA's file does not say why lending nearly stopped, but a lender should not read the older loans as a guide to what SBA will finance today. For a borrower, the recent silence in the file means an SBA lender may have little fresh precedent for the deal, so the application has to carry its own evidence.

The code is a weak fit. Manufactured home sites share their code with other real estate lessors, including landlords of land and other property, so this cell mixes community owners with lessors of other kinds. The median loan is $445,750, half fall between $215,625 and $1.1 million, and 3.6% carry a franchise. The Bancorp Bank National Association leads with 20 loans and $31.7 million; Manufacturers and Traders Trust Company has 11 for $2.2 million, Banc of California 10 for $17.0 million, Telhio Credit Union Inc 9 for $7.5 million, and Newtek Small Business Finance, LLC 8 for $7.8 million. Texas has 30 loans, California 29, Minnesota 22, New York 17 and Ohio 15.

Floors from the older loans

Of approvals in FY2017 to FY2024, 13.4% at minimum were cancelled and 13.8% at most. Charge-offs on the 172 community loans disbursed over FY2017 to FY2021 total 1.2% at minimum, with 0.58% inside five years, and no metric passes our distinctness margin. The loans that funded have mostly held up, which fits a business where residents own their homes and lease only the site.

What a community study must test

For a 7(a) loan, the first question is eligibility: the study should show an operating business, not a passive landlord. Then it has to test demand from the region's supply of affordable housing and the community's own waiting list; the cost of roads, utilities and pad repairs, which age; debt service coverage from lot rent after the expenses the owner, not the residents, pays; and the appraisal, which rests on lot rent income and comparable community sales.