SBA Feasibility Study for an RV Park: What the Lender Tests, and a Full Worked Engagement

An RV park is not real estate leased to a tenant. It is an outdoor hospitality operating business that earns its income one night at a time, with sharper seasonality than a hotel and a demand base that shifts between transient travellers, seasonal snowbirds, and workforce tenants. That operating character is why the SBA file rests on the feasibility study, and why the study lives or dies on two sections: the operating expense structure and the debt service coverage conclusion. This page shows both, in full, with the arithmetic on the page.

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Bankable Study Versus Business Plan

Before the method, the market. These figures are computed by Loan Analytics from the SBA 7(a) and 504 loan-level FOIA files, March. 31, 2026 release, covering fiscal 2020 through the first half of fiscal 2026, net of cancellations.

Lending backbone:
SBA 7(a) loans: 400, totalling $537 million
Average 7(a) loan: $1.34 million
SBA 504 debentures: 374, totalling $290 million
Average 504 debenture: $776,000
Median term: 300 months
Average initial rate: 7.54 percent
Start-ups and businesses under two years: 46.8 percent of loans
Change of ownership: 16.0 percent of dollars

Approvals by fiscal year: 56 loans and $64 million in 2020, 85 and $93 million in 2021, 55 and $61 million in 2022, 58 and $100 million in 2023, 55 and $84 million in 2024, 64 and $101 million in 2025, and 27 and $33 million through March 2026. Loan counts have held near 55 to 65 a year while dollars have risen, which means the average park being financed is getting larger.

Texas leads on dollars at $108 million across 52 loans, followed by Florida at $53 million, Utah at $27 million, North Carolina and Colorado at $26 million each, and Arizona at $24 million. Live Oak Banking Company originated 45 loans for $123 million, close to a quarter of all 7(a) program dollars in the class.

The number that matters most. On the seasoned fiscal 2010 to 2019 origination cohort, 318 RV park 7(a) loans have resolved as paid in full or charged off. The charge-off rate is 2.20 percent by count and 0.66 percent by dollar. The all-industry figures on the same basis are 7.30 percent and 3.34 percent.

Read those two facts together. Nearly half of all RV park loans go to start-ups or businesses under two years old, which is to say they are underwritten on a projection rather than a track record. And the class still charges off at under a third of the all-industry rate by count and a fifth by dollar. The projections have, on the whole, been good ones. That is an argument for the asset class, and it is equally an argument for the discipline that produced those projections.

Why an SBA Lender Orders a Study on an RV Park

SOP 50 10 8 contains no rule requiring a feasibility study, and SOP 50 10 8.1, effective 1 October 2026 for any application receiving a loan number on or after that date, does not add one. The decision sits with the lender. Three features of an RV park file push lenders to order one almost every time.

It is a special-purpose property. RV parks sit on the SOP's limited and special purpose property list. The asset has restricted alternative use, which means the SBA treats the collateral as higher risk, the appraisal must be a going-concern appraisal by an industry-experienced appraiser with a separate allocation of value to land, improvements, equipment and intangibles, and under the 504 program the borrower's contribution rises to 15 percent for a special-purpose property and 20 percent where the borrower is also a new business.

Repayment rests on a projection. Where there is no operating history, the SOP requires the credit memorandum to carry detailed projections with supporting assumptions, justification for revenue growth and for any expense reduction, and a comparison to industry trends, reaching coverage of at least 1.15 within two years of funding or, for construction, within two years of completion. The feasibility study is the document that supplies that evidence.

Seasonality makes the annual average misleading. A park that averages 62 percent occupancy may run 85 percent for four months and 30 percent for five. Debt service does not pause in the off season. A study that reports only an annual figure has not told the lender what it needs to know.

Under SOP 50 10 8.1 a further point applies to acquisitions specifically. Change of ownership is only 16 percent of RV park dollars, the lowest share of any special-purpose class we track, but where a park is being bought rather than built, it must now clear 1.25x on historical earnings, and a Quality of Earnings report is required where the business purchase price is $3 million or more. Ground-up parks are unaffected by that change, and remain projection files, which is where the study has always lived.

The Worked Engagement

The following runs a complete engagement end to end. The program parameters are the verified current rules. The project inputs are a composite drawn from the way these deals are actually structured, chosen to demonstrate the analysis at the level an underwriter reviews it. An actual study builds every figure from project-specific evidence.

The project. A ground-up 90-site RV park on 12 acres in a Texas Hill Country corridor, sponsored by an operator with prior campground management experience but no ownership history, financed under SBA 504. Site mix: 60 full-hookup pull-through transient sites, 20 back-in transient sites, 10 extended-stay sites let monthly.

Trade area and demand

The trade area for a destination RV park is not a ring. It is the set of origin markets within a comfortable towing day, plus the attraction that draws them. For this project that meant a primary origin zone within a three-hour drive covering the San Antonio and Austin metros, a secondary zone at five to six hours covering Houston and the Dallas-Fort Worth metroplex, and a demand overlay from the state park and river recreation traffic the corridor generates.

Demand was built from three segments separately, because they occupy different sites at different rates and respond to different seasons:

Transient leisure. Registered RV counts in the origin zones, state park visitation series for the corridor, and reservation platform availability patterns in peak months.
Seasonal and snowbird. Length-of-stay patterns at comparable parks, and the winter Texas inflow the region receives.
Workforce and extended stay. Regional construction and infrastructure activity, which in this corridor is episodic rather than structural, so it was underwritten as a floor rather than a driver.

The capture rate was anchored to documented absorption at comparable parks that opened in the corridor in the prior five years, not to the sponsor's expectation.

Competitive supply

Eleven parks were surveyed within the competitive radius on site count, site mix, hookup type, amenity package, published and shoulder-season rates, and observable occupancy in peak and off-peak windows. Two of the eleven were under expansion, adding a combined 74 sites within the projection period, which reduced the modelled capture rate and pushed stabilization from month 24 to month 30.

That is the kind of finding that only comes from a survey. A study that took the sponsor's competitive list at face value would have missed 74 sites of new supply and overstated the ramp by six months.

Construction cost build-up:

Land, 12 acres: $900,000 ($10,000 per site)

Site work, utilities, roads and pads: $2,520,000 ($28,000 per site)

Amenity building, 4,000 SF: $1,140,000 ($12,667 per site)

Pool, playground and site amenities: $420,000 ($4,667 per site)

Furniture, fixtures and equipment: $180,000 ($2,000 per site)

Soft costs, design, permits, legal and financing: $520,000 ($5,778 per site)

Contingency, 7 percent of hard cost: $286,000 ($3,178 per site)

Working capital: $150,000 ($1,667 per site)

TOTAL PROJECT COST: $6,116,000, or $67,956 per site

Site work is the line that decides an RV park budget and the line sponsors most often underestimate. Water, sewer or septic capacity, electrical service at 50 amp, road base and pad construction, and drainage together run $28,000 a site here. On a site with poor soils, a long utility run or a septic requirement, the same line can exceed $40,000, which is why the study treats utility capacity as a go or no-go item rather than a cost assumption.

Revenue build:

Transient sites: 80 sites x 365 nights x 62 percent occupancy x $58 average daily rate = $1,050,000

Extended stay: 10 sites x 12 months x 92 percent occupancy x $750 per month = $82,800

Ancillary, store, propane, laundry and activities: 8 percent of site revenue = $90,600

TOTAL REVENUE: $1,223,400

Occupancy is modelled monthly, not annually. The 62 percent stabilized average is the output of a monthly curve running from roughly 30 percent in the deep off season to the high 80s in peak months, and the monthly curve is what shows the lender whether debt service is covered in February.

Operating expenses:

Payroll and benefits: $215,000 (17.6 percent of revenue)

Utilities: $110,000 (9.0 percent)

Repairs and maintenance: $55,000 (4.5 percent)

Property insurance: $44,000 (3.6 percent)

Real estate taxes: $68,000 (5.6 percent)

Marketing and reservation platform fees: $43,000 (3.5 percent)

Administrative and general: $37,000 (3.0 percent)

Management fee, 4 percent of revenue: $49,000

Replacement reserve, 2 percent of revenue: $24,500

TOTAL OPERATING EXPENSES: $645,500, or 52.8 percent of revenue

Four observations an underwriter should take from that table.

Payroll does not scale down with occupancy. A park needs a manager, maintenance and front desk coverage whether it is 40 percent or 80 percent full. In this model roughly $244,000 of the $645,500 is genuinely fixed, and the remainder varies at about 32.8 percent of revenue. That split is what makes the downside cases below behave the way they do, and any study that models expenses as a flat percentage of revenue will understate the downside badly.

Utilities are a pass-through that often is not. At 9 percent of revenue, metered electricity on 50-amp sites is a real cost. Parks that do not sub-meter extended-stay sites absorb summer air conditioning load directly.

Insurance is rising and should not be held flat. On the Front Range and across much of Texas, hail and wind exposure has repriced property coverage. Modelling insurance at last year's premium for five years is a common and material error.

The management fee and replacement reserve belong in the expense stack. Owner-operators frequently omit both. The SBA underwrites the business, not the owner's willingness to work unpaid, and a reserve is what keeps pads, utilities and the amenity building serviceable. Leaving them out inflates NOI by 6 percent of revenue and produces a coverage ratio the lender cannot rely on.

Net operating income: $1,223,400 less $645,500 equals $577,900.

Financing structure:

Conventional bank first lien, 50 percent: $3,058,000

CDC debenture, SBA guaranteed, 30 percent: $1,834,800

Borrower equity, 20 percent: $1,223,200

TOTAL PROJECT: $6,116,000

Bank first lien debt service. $3,058,000 at 7.75 percent on a 25-year amortization. Using the standard amortization formula, payment equals principal times the monthly rate times one plus the monthly rate raised to the number of payments, divided by one plus the monthly rate raised to the number of payments minus one, with a monthly rate of 0.0064583 over 300 payments, the monthly payment is approximately $23,101, or about $277,200 per year.

CDC debenture debt service. $1,834,800 at 6.40 percent, also on a 25-year term. With a monthly rate of 0.0053333 over 300 payments, the monthly payment is approximately $12,274, or about $147,300 per year.

Total annual debt service: $277,200 plus $147,300 equals $424,500.

Debt service coverage ratio: $577,900 divided by $424,500 equals approximately 1.36x.

That clears the 1.15x to 1.25x range lenders and CDCs generally apply, with a real cushion. Worked in reverse, the project would need NOI of $530,600 to hit exactly 1.25x, so the projected $577,900 sits about $47,300 above the threshold.

The ramp:

Year one, 38 percent occupancy: revenue $768,000, operating expenses $495,900, net operating income $272,100, debt service coverage 0.64x

Year two, 52 percent occupancy: revenue $1,033,700, operating expenses $583,100, net operating income $450,600, debt service coverage 1.06x

Year three, stabilized at 62 percent occupancy: revenue $1,223,400, operating expenses $645,500, net operating income $577,900, debt service coverage 1.36x

Year one does not cover debt service. The shortfall is $152,400, and the $150,000 working capital line in the cost build-up exists precisely to fund it. That is not a flaw in the project; it is the normal shape of a ground-up hospitality ramp, and a study that hides it by showing only stabilized figures has failed the lender. The right response is to size the working capital or interest reserve against the modelled shortfall and say so explicitly, which is what a credit committee needs in order to approve the loan rather than decline it.

Sensitivity:

Base case, stabilized: net operating income $577,900 against debt service of $424,500, coverage 1.36x

Occupancy at 55 percent instead of 62: net operating income $492,100, coverage 1.16x

Average daily rate 10 percent below projection: net operating income $502,000, coverage 1.18x

Construction cost 10 percent over budget: debt service rises to $467,000, coverage 1.24x

Bank lien rate 100 basis points higher: debt service rises to $449,000, coverage 1.29x

Occupancy at 55 percent and cost 10 percent over: net operating income $492,100 against debt service of $467,000, coverage 1.05x

Read down that column and the project's real risk profile appears. A rate move alone does not break it. A cost overrun alone takes it to the edge of the threshold. Occupancy is the sensitive variable: seven points of occupancy costs twenty basis points of coverage. And the combined case, which is an ordinary pairing rather than a catastrophe, lands at 1.05x, above 1.0x but with no margin at all.

The mitigants that follow are specific: more equity to reduce the debt, a guaranteed maximum price contract to cap the cost exposure, pre-opening reservation commitments to de-risk the ramp, or a phased build that delivers 60 sites first and funds the remaining 30 from operations.

That is what a sensitivity table is for. Not to demonstrate that the project works, but to tell the lender exactly which assumption to watch and what to require.

What the Study Concluded

Feasible under the proposed structure, with conditions. The stabilized coverage supports the debt with a cushion, the demand case survives the addition of 74 competing sites, and the cost basis is defensible against current regional benchmarks. But coverage is negative in year one and thin in year two, and the combined downside sits at 1.05x. The recommendation carried three conditions: working capital sized to the modelled year-one shortfall, a fixed-price construction contract, and confirmed utility capacity before closing.

A study that had reported 1.36x and stopped would have been accurate and useless.

Our RV park feasibility study service page sets out scope, timeline and fees for this kind of engagement.

SBA Feasibility Study for an RV Park: FAQ

Does the SBA require a feasibility study for an RV park?

Not by rule. SOP 50 10 8 leaves the decision with the lender and SOP 50 10 8.1 does not change that. In practice lenders order one on nearly every RV park file, because the asset is on the SBA's special purpose property list, repayment usually rests on projections, and seasonality makes the annual average an unreliable guide to whether debt service is covered month by month.

What debt service coverage ratio does an RV park need?

Lenders and CDCs generally underwrite to 1.15x to 1.25x, and 7(a) Small Loans at or below $350,000 carry a mandatory 1.10x floor. The more important question is coverage during the ramp and under stress, not at stabilization. A project that clears 1.35x stabilized and 1.05x in a combined downside is a different credit from one that clears 1.35x in every case.

How much equity does a 504 RV park project require?

Ten percent is the standard 504 contribution. It rises to 15 percent for a special-purpose property, and to 20 percent where the borrower is also a new business, which describes most ground-up RV park sponsors.

What operating expense ratio should an RV park model?

Full-service parks commonly run in the high 40s to mid 50s as a percentage of revenue, with the mix varying by amenity level, whether sites are sub-metered, and local tax and insurance loads. The ratio matters less than the fixed and variable split, because that split determines what happens to coverage when occupancy falls short.

Can an RV park be financed under USDA instead?

Often, and sometimes better. RV parks sit in rural locations by their nature, and Business and Industry financing serves projects outside a city or town of more than 50,000 and its contiguous urbanized area, with a program maximum well above the 7(a) cap. Eligibility is confirmed address by address on the USDA map. The five-component analysis 7 CFR Part 5001 requires is a different structure from an SBA study, though the analytical core is the same.

What changes for an RV park acquisition on 1 October 2026?

From that date, SOP 50 10 8.1 requires an acquisition to clear 1.25x coverage measured on historical earnings, with projections reviewed but not usable to meet the floor, and a lender-ordered Quality of Earnings report where the business purchase price is $3 million or more. Ground-up parks are unaffected and remain projection files.