What Lenders Should Expect in an SBA Feasibility Report

A section-by-section walkthrough of what a complete SBA feasibility study contains and why each section matters

A complete SBA feasibility study is a structured analytical document, typically 40 to 80 pages, that systematically evaluates whether a proposed project can generate sufficient cash flow to service its debt. The study is not a business plan, not a market overview, and not an opinion letter. It is an evidence-based analysis with a defensible conclusion that the lender and SBA can rely on for underwriting purposes.

This page walks through each section of a properly structured feasibility report, explains what the section should contain, and identifies what lenders and credit committees should look for when reviewing it. Whether you are a credit officer evaluating a study for the first time or a borrower who wants to understand what you are paying for, this guide maps the document from cover to conclusion.

Sample Table of Contents

A well-organized feasibility study follows a logical progression from context to analysis to conclusion. The following table of contents represents the standard structure used in institutional-quality SBA feasibility reports.

The sections below walk through each component in detail.

Section I: Executive Summary and Recommendation

What it contains: the executive summary is the most-read section of the report. It condenses the entire analysis into 2 to 4 pages, presenting the project description, key findings, critical metrics (projected DSCR under base and pessimistic scenarios, stabilized occupancy or utilization, revenue and NOI projections), and the analyst's go/no-go recommendation. A credit officer should be able to read the executive summary alone and understand whether the project is feasible, what the key risks are, and what conditions (if any) apply to the recommendation.

What to look for: the recommendation should be explicit and unambiguous. "Feasible," "feasible with conditions," or "not feasible" are the three acceptable outcomes. A study that concludes with "the project has potential but faces challenges" without a clear recommendation is hedging, not analyzing. If the recommendation is conditional (for example, "feasible only if occupancy exceeds 65% by Month 18"), the conditions must be specific, measurable, and tied to the analysis.

Section II: Project Description and Scope

What it contains: a detailed description of the proposed project including property type, location, size (square footage, room count, unit count, bay count, or other relevant capacity metric), proposed use, borrower identity, total project cost, financing structure (SBA program, loan amount, equity injection), and the scope of the analyst's engagement. This section also includes limiting conditions and extraordinary assumptions that frame the analysis.

What to look for: the project description should match the loan application. If the feasibility study describes a 90-room hotel but the loan application is for 110 rooms, the study does not apply to the proposed project. The scope should clearly state what the analyst evaluated and what falls outside the scope (for example, "this study does not constitute an appraisal of market value" or "environmental site assessment is excluded from this engagement").

Section III: Site Assessment and Location Analysis

What it contains: physical evaluation of the subject site including location within the market, access and visibility from primary roadways, traffic counts (sourced from state DOT data), surrounding land uses, zoning confirmation, parking adequacy, utility availability, environmental considerations (flood zone status, wetlands proximity, known contamination), and an assessment of the site's competitive advantages and disadvantages relative to competing locations.

What to look for: evidence of an in-person site visit. Photographs of the subject property and the surrounding area should be included. A study that evaluates site quality without visiting the site is working from incomplete information. Zoning confirmation should reference the specific zoning designation and confirm that the proposed use is permitted (as-of-right or by conditional use permit). If a conditional use permit is required, the study should note the approval status and timeline.

Section IV: Market and Demographic Analysis

What it contains: quantified analysis of the trade area's demographic and economic characteristics that drive demand for the proposed use. Population size and growth trends, household income distribution, age distribution, employment base and major employers, housing characteristics (renter vs owner, multi-family density), daytime population, and any demand-specific indicators relevant to the property type (e.g., vehicles per household for gas stations, children under 5 for daycare, hotel room night demand generators for hotels).

What to look for: the trade area should be defined with a clear boundary (radius, drive-time, or natural boundaries) and the rationale for that boundary should be explained. Data sources should be cited (Census Bureau, ESRI, CoStar, state agencies). The demographic analysis should connect to the demand model: if the study says the trade area has 50,000 residents, the next step should explain what that population implies for demand, not simply present the number as a standalone fact.

Section V: Competitive Landscape and Supply Analysis

What it contains: complete inventory of every competing facility within the defined trade area. Each competitor should be identified by name, address, capacity (rooms, units, bays, SF), pricing, condition/age, and competitive positioning. The section should include both existing supply and pipeline supply (facilities under construction, in permitting, or announced). A competitive positioning matrix or map showing the subject property relative to competitors is standard.

What to look for: completeness. If you know of a competitor in the market that is not listed, the study has a gap. Pipeline supply is the most commonly omitted element and the most dangerous. A market that appears undersupplied today may be oversupplied in 12 months when three competitors under construction open simultaneously. The study should document how pipeline supply was identified (planning department records, commercial real estate databases, site visits).

Section VI: Demand Analysis and Revenue Projections

What it contains: the analytical engine of the study. This section translates the market data (Section IV) and competitive landscape (Section V) into revenue projections. The methodology varies by property type (STR-based RevPAR projections for hotels, radius-based SF/capita analysis for self-storage, traffic-based capture rates for gas stations, patient volume modeling for medical offices) but should always include documented assumptions, cited data sources, and a logical chain from market conditions to projected revenue.

What to look for: the projections should be built independently from market data, not adopted from the borrower's business plan. If the study's revenue projection is within 2% to 3% of the borrower's own numbers, ask whether the analyst built the projection independently or reverse-engineered it to match. Revenue should be projected on at least an annual basis for 3 to 5 years, with monthly detail for Year 1 (essential for new construction and startups where the ramp-up trajectory determines early DSCR). Each revenue assumption should be traceable to a specific data source or comparable.

Section VII: Financial Pro Forma and DSCR Analysis

What it contains: multi-year income and expense projections structured as a standard commercial real estate pro forma. Revenue projections (from Section VI) flow into the pro forma, which deducts operating expenses by category (labor, utilities, maintenance, insurance, property taxes, management, marketing, reserves) to arrive at net operating income (NOI). NOI is then measured against total debt service (all loan obligations including SBA mortgage, equipment financing, and any other debt) to calculate the debt service coverage ratio.

The most common pro forma error: omitting debt obligations. A DSCR calculated against only the SBA mortgage while ignoring $200,000 in annual equipment lease payments is materially overstated. The lender should verify that total debt service includes every obligation the borrower must pay from business cash flow.

Section VIII: Sensitivity and Risk Analysis

What it contains: stress testing of the base case projections under adverse scenarios. A credible sensitivity analysis includes three scenarios (base, optimistic, pessimistic) with DSCR calculated for each, single-variable sensitivity testing (what happens to DSCR when revenue drops 10%? When expenses increase 15%? When occupancy delays 6 months?), identification of the variables with the greatest DSCR impact (the "key risk factors"), and a breakeven analysis that identifies the revenue level or occupancy rate at which DSCR drops to 1.0x.

What to look for: the pessimistic scenario should produce a DSCR that is meaningfully lower than the base case. If the pessimistic scenario shows DSCR of 1.20x when the base case is 1.35x, the stress test was too gentle. A credible pessimistic case typically shows DSCR dropping to 0.90x to 1.05x, which forces the analyst to identify and the lender to evaluate the real downside risk. The breakeven analysis is the single most useful output for credit decision-making: it tells the lender exactly how much the project can underperform before debt service is threatened.

Section IX: Management and Operator Assessment

What it contains: evaluation of the borrower's qualifications to successfully operate the proposed business. Industry experience (years, roles, relevant certifications), management structure (will the borrower be the day-to-day operator or hire management?), key personnel (chef for a restaurant, general manager for a hotel, head brewer for a brewery), and any gaps in the operator's experience that represent execution risk.

What to look for: this section is especially important for startups and for property types where operator quality directly determines financial performance (hotels, restaurants, medical practices). A feasibility study that validates the market but does not assess whether the borrower can execute in that market is incomplete. If the borrower lacks direct experience, the study should note the mitigation plan (experienced hire, franchise training program, management company engagement).

Section X: Conclusion and Recommendation

What it contains: the analyst's final conclusion, restating the recommendation from the executive summary with the supporting rationale. The conclusion should reference the key findings from each analytical section and explain how they support the recommendation. Any conditions on the recommendation should be clearly stated.

What to look for: consistency between the data and the conclusion. If the competitive analysis identifies an oversaturated market, the sensitivity analysis shows DSCR below 1.0x under a 15% revenue reduction, and the operator has no industry experience, but the conclusion is "feasible," something does not add up. The conclusion should be the logical product of the preceding analysis, not an afterthought.

Appendices: What Should Be Included

The appendices provide the supporting evidence that allows the lender to verify the analyst's work. Standard appendices include detailed financial projection tables (monthly Year 1, annual Years 2 to 5), competitive property profiles with photographs, trade area maps (demographic heat maps, competitor location maps), data source documentation, the analyst's qualifications and professional affiliations, the engagement letter, and the reliance letter.

The reliance letter is the single most important appendix item. It must be addressed to the lender and the SBA (and the CDC for 504 transactions), state that the addressees may rely on the analysis for underwriting and compliance purposes, and be signed by the analyst. Without a properly addressed reliance letter, the study is legally a document prepared for the borrower's benefit only, and the lender has no standing to rely on it.

For a quality assessment framework that can be applied to any feasibility study, see our 15-point evaluation checklist for lenders. For details on our analytical methodology, see our methodology page.