Market Analysis

SBA Lending Trends and Feasibility Study Demand

By David Jones, MAI, CCIM · Published 2026 · 9 min read

FY2025 closed as the strongest SBA lending year in program history. The agency guaranteed 84,400 combined 7(a) and 504 loans totaling $44.8 billion, driven by 77,600 7(a) loans for $37 billion and 6,750 504 loans for $7.8 billion. The volume represents a substantial increase over FY2024, when the program delivered 70,242 7(a) loans for $31.1 billion. For feasibility study providers, lenders, CDCs, and borrowers, the data behind these headline numbers reveals which asset classes are expanding, which geographic markets are absorbing the most capital, and where feasibility study demand is concentrating heading into FY2026.

This analysis uses the official SBA 7(a) and 504 Activity Reports and SBA Monthly & Yearly Activity Report data to identify the lending patterns that matter most for projects moving through feasibility study engagements.

The Headline Numbers

The year-over-year growth across every key metric confirms that SBA lending recovered from the post-pandemic normalization period and entered a sustained expansion phase. Q2 FY2025 (January through March 2025) recorded more than $10 billion in 7(a) approvals, the second-highest quarter in program history behind only Q4 FY2021 when pandemic relief measures drove $16.9 billion. The sustained run of three consecutive quarters above $8.6 billion marks the most durable high-volume period since the SBA began tracking in 1991.

Quarterly Trajectory Through FY2025

The Q3 slowdown coincided with the June 1, 2025 implementation of SOP 50 10 8, which tightened underwriting requirements: minimum credit scores increased across lender programs, the maximum loan eligible for streamlined underwriting dropped from $500,000 to $350,000, and ownership verification plus equity injection documentation requirements became more rigorous. Q3's dip reflected the adjustment period as lenders recalibrated to the new standards. By Q4, volumes had stabilized with larger average loan sizes, indicating that fewer but stronger deals were clearing the new underwriting thresholds.

Demographic and Segment Growth

The aggregate volume tells only part of the story. Beneath the headline numbers, specific borrower segments expanded dramatically through FY2025.

Asset Classes Driving Growth

While the SBA does not publish fiscal year approvals broken down by NAICS code in real time, cumulative program data and industry observation identify the asset classes where SBA-financed activity is concentrating and where feasibility study demand is most intense.

Hotels, gas stations, car washes, self-storage, and breweries account for a disproportionate share of feasibility study volume because their properties carry special purpose classification or new construction triggers. Restaurants and medical offices generate high loan volume but lower feasibility intensity because many transactions are established-business acquisitions that do not trigger the requirement.

Interest Rate Environment Impact

The interest rate environment shapes feasibility study demand in two ways: it affects the underlying lending volume, and it changes the analytical scope of studies that do get commissioned.

Effect on DSCR calculations. Every 100 basis point change in the loan rate shifts the DSCR calculation meaningfully for variable-rate 7(a) loans. A project that produced a 1.38x DSCR at a 10.5% rate produces approximately 1.29x at 11.5% and approximately 1.20x at 12.5%, holding NOI constant. Feasibility studies in 2025 and 2026 must stress-test rate sensitivity more aggressively than studies from the low-rate era, because a rate increase of 150-200 basis points during the loan term is a realistic scenario that can move DSCR from comfortable to marginal.

Effect on project viability at the margin. Higher rates have shifted some projects from clearly feasible to conditionally feasible. A self-storage facility that cleared 1.25x DSCR at 8.5% rates may produce only 1.12x at 11.5% rates. Borrowers with projects near the threshold are increasingly asking feasibility analysts to model multiple rate scenarios and identify the rate level at which the project becomes infeasible. This rate-driven scenario analysis has become a standard element of 2025-2026 feasibility work that was less common in the 2020-2022 low-rate environment.

SOP 50 10 8 Impact on Feasibility Scope

The June 1, 2025 implementation of SOP 50 10 8 has changed not just which loans get approved but what feasibility studies must address.

Reduced Small Loan threshold. The streamlined underwriting threshold dropped from $500,000 to $350,000. Loans between $350,000 and $500,000 now require full standard underwriting, which means more of these mid-size transactions will involve feasibility studies where they previously passed through on delegated underwriting alone.

Small Loan DSCR threshold. Procedural Notices 5000-875701 and 5000-876777 clarified that 7(a) Small Loans (under $350,000) are held to a 1.10x DSCR minimum rather than the 1.15x Standard 7(a) threshold. This tighter but still codified standard means feasibility studies for Small Loan projects must demonstrate DSCR that clears a specific number, not just "adequate cash flow" in general terms.

Enhanced documentation requirements. Ownership verification, equity injection source documentation, and business projection standards all tightened. Feasibility studies that previously served as the primary independent validation of borrower projections now compete with additional documentation requirements, which means the study must be more defensible against scrutiny than in the pre-SOP-50-10-8 environment.

Geographic Concentration

SBA lending is not uniformly distributed across the United States. Seven states consistently account for roughly 40% of 7(a) loan volume: California, Texas, Florida, New York, Illinois, Georgia, and Pennsylvania. Within these states, metropolitan areas dominate the dollar volume while rural areas show disproportionate loan count concentration in Community Advantage programs.

Feasibility study demand tracks the dollar volume geography but with nuances. Gulf Coast markets (Texas, Louisiana, Florida Panhandle) show elevated gas station and hotel feasibility volume driven by tourism and energy corridor development. Sun Belt markets (Arizona, Nevada, Tennessee, North Carolina, South Carolina, Florida) dominate self-storage and multifamily feasibility demand driven by population migration. Pacific Northwest and Mountain West markets show concentration in glamping, brewery, and agritourism feasibility work driven by outdoor recreation economy expansion. Midwest markets show steadier, more diversified feasibility demand without the concentration seen in high-growth Sun Belt submarkets.

Forward-Looking Assessment for FY2026

Based on the trajectory through Q1 FY2026 (October-December 2025) and the policy environment, several patterns are likely to define feasibility study demand through 2026.

Volume normalization. FY2025's growth rate is unlikely to repeat. FY2026 total lending is expected to approximate FY2025 levels or grow modestly (5% to 10%). The SOP 50 10 8 underwriting filter has established a new equilibrium between demand and approval volume.

Larger average loan sizes. The trend toward fewer but larger loans (average 7(a) loan rose from $443,097 in FY2024 to $477,571 in FY2025) will likely continue. Feasibility studies will skew toward mid-size to larger projects ($500K to $5M+) as smaller transactions increasingly route through SBA Express channels without feasibility requirements.

Asset class persistence. The special purpose asset classes (hotels, gas stations, car washes) will continue to generate the highest feasibility intensity regardless of rate environment changes. These property types are not in lending decline; new construction and acquisition demand both remain active.

Rate sensitivity emphasis. Feasibility studies through 2026 will incorporate rate sensitivity as a standard element, not a discretionary add-on. Borrowers, lenders, and CDCs increasingly expect to see DSCR tested at Prime +100bps, Prime +200bps, and Prime +300bps scenarios. The rate environment is stable enough to model but volatile enough to require explicit stress testing.

Pipeline supply scrutiny. Markets that absorbed heavy self-storage, car wash, and hotel development in 2022-2024 will increasingly show pipeline oversupply concerns. Feasibility studies in these asset classes will need to document competitive supply additions more rigorously than in prior cycles, and the probability of infeasible conclusions in saturated markets will rise.

For property-type-specific analysis, see our industry pages. For a complete overview of when feasibility studies are required, see our trigger guide.