SBA Feasibility Study Sample Table of Contents

Contains: Property identification, client and lender names, analyst credentials and firm, report date, signed reliance letter authorizing lender and SBA to rely on the analysis for underwriting purposes.

What lenders look for: Reliance letter addressees. If it is addressed only to the borrower, the lender has no standing to rely on the document. Must name the lender and the SBA (and CDC for 504 transactions).

Contains: Feasibility conclusion (feasible, feasible with conditions, or not feasible), projected stabilized DSCR, key risk factors, critical metrics (occupancy, ADR/rate, revenue, NOI), and any conditions on the recommendation.

What lenders look for: The recommendation must be explicit and unambiguous. The DSCR should be stated under both base and pessimistic scenarios. If the recommendation is conditional, the conditions must be specific and measurable.

Contains: Property type, location, size (SF, rooms, units, bays), proposed use, total project cost breakdown (land, hard costs, FF&E, soft costs, working capital), financing structure (SBA program, loan amount, equity injection, rate, term), borrower identity, and scope limitations.

What lenders look for: Project description must match the loan application. If the study describes a 90-room hotel but the application is for 110 rooms, the study does not apply. Scope limitations should be reviewed for anything that narrows the analysis inappropriately.

Contains: Site visit photographs (subject property from multiple angles, surrounding area), visibility and signage assessment, access and ingress/egress evaluation, traffic counts (ADT from state DOT), parking adequacy, zoning confirmation, FEMA flood zone determination, wetlands screening (NWI review), utility availability, and assessment of competitive advantages and disadvantages of the location.

What lenders look for: Evidence of in-person site visit (dated photographs). Zoning must confirm the proposed use is permitted. Flood zone status must be documented. Any environmental flags (prior gas station use, brownfield status) should be noted with recommendation for Phase I ESA if warranted.

Contains: Trade area definition and rationale, population and household counts at each radius/drive-time ring, population growth trends and projections, median household income and income distribution, age distribution, employment base and major employers, daytime population, housing characteristics, and property-type-specific demand indicators (vehicles per household, children under 5, hotel room night generators, etc.).

What lenders look for: Trade area boundary should be justified, not arbitrary. Data sources must be cited with dates. Every demographic finding should connect to a demand implication, not just present raw numbers. Data should be less than 6 months old at report date.

Contains: Complete inventory of every competing facility within the trade area, each identified by name, address, capacity, pricing, age/condition, and competitive positioning. Includes both existing supply and pipeline supply (under construction, in permitting, announced). Competitive positioning matrix or map showing subject relative to competitors. Individual competitor profiles with photographs.

What lenders look for: Completeness is the test. If the lender knows of a competitor not in the inventory, the study has a gap. Pipeline supply is the most commonly omitted element and the most dangerous. How was pipeline supply identified (planning department records, CoStar, site observation)?

Contains: Property-type-specific demand quantification model (STR-based for hotels, SF-per-capita for self-storage, traffic capture for gas stations, etc.), documented assumptions with source citations, logical chain from market conditions to projected revenue. Revenue projected annually for 3 to 5 years with monthly detail for Year 1. Dual-validation against at least one alternative methodology.

What lenders look for: Projections must be built independently from market data, not adopted from the borrower's business plan. If the study's projections match the borrower's plan within 2 to 3%, ask whether the analyst built them independently. Each revenue assumption should be traceable to a specific data source.

Contains: Multi-year income statement: gross revenue, vacancy/collection loss, effective gross income, other income, itemized operating expenses (labor, utilities, maintenance, insurance, taxes, management, marketing, reserves), net operating income, total debt service (ALL obligations), and DSCR. Monthly detail for Year 1. Management fee included even if owner-operated.

What lenders look for: Total debt service must include ALL obligations (SBA loan, equipment leases, lines of credit, seller notes). Management fee must be included. Expense ratios should be benchmarked against industry data. DSCR must reach the program threshold within two years per SOP 50 10 8.

Contains: Three scenarios (base, optimistic, pessimistic) with DSCR calculated for each. Single-variable sensitivity testing (revenue -10%/-15%/-20%, expenses +10%/+15%, rate +100/+200/+300 bps, absorption delay +6 months). Breakeven analysis identifying the revenue or occupancy level at which DSCR hits 1.00x. Key risk factors identified and ranked.

What lenders look for: Pessimistic scenario should produce DSCR between 0.85x and 1.05x for most projects. If pessimistic DSCR is still above 1.20x, the stress test was too gentle. Breakeven analysis is the single most useful metric for credit decision-making. Rate sensitivity is essential for variable-rate 7(a) loans.

Contains: Evaluation of borrower's industry experience, management structure (owner-operated vs hired management), key personnel qualifications, experience gaps and mitigation plans (experienced hires, franchise training, management company). Assessment of whether the operator can execute the business model the financial projections assume.

What lenders look for: Especially important for startups and property types where operator quality directly determines performance (hotels, restaurants, medical practices). If borrower lacks direct experience, what is the mitigation plan? Is it credible?

Contains: Restates the recommendation from the executive summary with supporting rationale from each analytical section. References key findings, states any conditions, and explains how the evidence supports the conclusion.

What lenders look for: Consistency between the data and the conclusion. If the competitive analysis identifies oversupply but the conclusion is 'feasible,' something does not add up. The conclusion should be the logical product of the preceding analysis.

Contains: Detailed monthly pro forma tables (Year 1) and annual tables (Years 2-5), competitive property profiles with photographs, trade area maps (demographic heat maps, competitor location maps), data source documentation, analyst qualifications and professional affiliations, engagement letter, and signed reliance letter.

What lenders look for: Analyst qualifications (Appraisal Institute affiliation, professional designations, SBA experience). Reliance letter signed and properly addressed. Data source citations with access dates for replicability.