Why SBA Lenders Require a Feasibility Study
SBA lending guidelines under SOP 50 10 8 and 13 CFR § 120.172 require lenders to obtain an independent feasibility study when underwriting loans involving startups, new construction, special-purpose properties, or projects where repayment capacity is uncertain. The study must be prepared by a qualified third party with no financial interest in the loan outcome or the borrower's success.
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A borrower's internal pro forma projections cannot serve as the basis for an SBA feasibility study. Lenders and SBA loan review committees require independently constructed revenue and expense projections grounded in verifiable market data, comparable operating performance, and defensible assumptions. The distinction is critical: a business plan advocates for a project's success, while a feasibility study objectively evaluates whether the project can generate sufficient cash flow to service its debt obligations.
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For most SBA-guaranteed loans exceeding $1 million, and for virtually all hotel and hospitality projects under the 504 program, a compliant feasibility study is not optional. It is a condition of credit approval.
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What Our SBA Feasibility Studies Include
Every MMCG feasibility study is engineered to withstand lender scrutiny, SBA loan review, and secondary market due diligence. Our standard deliverable addresses the full scope of analytical requirements that credit committees and CDC review boards expect.
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Market and demand analysis. Primary and secondary market research quantifying demand drivers, trade area demographics, consumer expenditure patterns, traffic counts, and competitive supply. We identify the project's addressable market and evaluate absorption risk with specificity.
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Competitive landscape assessment. Detailed profiling of direct competitors within the defined trade area, including operating metrics, pricing, occupancy, and market positioning. We assess competitive saturation and identify sustainable differentiation opportunities for the subject project.
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Financial projections and DSCR analysis. Independent five-year revenue and expense projections constructed from comparable operating data, industry benchmarks, and market-specific assumptions. Every projection includes debt service coverage ratio (DSCR) analysis against SBA thresholds. SOP 50 10 8 requires a minimum 1.15x DSCR within two years of stabilization; most lenders target 1.25x or higher.
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Sensitivity and risk analysis. Downside scenario modeling that stress-tests key variables: occupancy shortfalls, revenue ramp-up delays, cost escalation, and interest rate movement. Lenders approve studies that demonstrate controlled exposure under adverse conditions.
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Site and location evaluation. Assessment of the subject property's physical characteristics, zoning compliance, accessibility, visibility, and infrastructure adequacy relative to the proposed use.
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Institutional-Grade Data and Methodology
MMCG feasibility studies are constructed from the same data infrastructure used by institutional investors, national lenders, and CMBS underwriters. Our analytical methodology draws on:
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CoStar and REIS for commercial real estate market analytics, submarket fundamentals, and comparable property performance. STR (Smith Travel Research) for hotel and hospitality benchmarking. ESRI and the U.S. Census Bureau for demographic and consumer expenditure analysis. IBISWorld and RMA Annual Statement Studies for industry financial benchmarking. Placer.ai for foot traffic and mobility analytics. FEMA, NWI, and environmental databases for site-level risk screening.
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Every data point cited in our studies is traceable to its source. We do not rely on borrower-supplied projections, anecdotal evidence, or unverifiable assumptions. This methodological discipline is what separates an SBA-compliant feasibility study from a business plan dressed in analytical language.
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​SBA 7(a) vs. 504 Feasibility Study Requirements
While both programs require independent feasibility analysis, the analytical emphasis differs by program structure.

SBA 7(a) feasibility studies focus primarily on the borrower's capacity to service total debt from project cash flows. The study must demonstrate that projected net operating income supports the proposed loan structure at or above the lender's required DSCR threshold. Working capital adequacy and stabilization timelines receive particular scrutiny.
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SBA 504 feasibility studies carry additional requirements because Certified Development Companies (CDCs) serve as a second layer of underwriting review. Beyond standard DSCR analysis, 504 studies must address job creation and retention metrics, community economic impact, and alignment with the program's public policy objectives. Hotel and hospitality projects under the 504 program require feasibility studies in virtually all cases, regardless of loan size.
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MMCG produces studies calibrated to the specific program requirements of the lender and CDC involved in the transaction.
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Industries and Property Types
MMCG has produced SBA feasibility studies across every major commercial real estate asset class and special-purpose property type that SBA lending programs support:
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