Who Is Qualified to Prepare a Feasibility Study: Independence Rules Under SBA, USDA and HUD

The assumption nobody checks

For the regulation itself, section by section, see our 7 CFR Part 5001 Handbook.

Ask a lender, a borrower or a consultant who is permitted to prepare a feasibility study for an SBA loan and the answer comes back the same way every time: an independent third party with no financial interest in the project and demonstrated experience in the asset class. The phrase appears in engagement letters, in credit memoranda, in the scope sections of the studies themselves. It is repeated so consistently that most people in the transaction assume it is quoted from somewhere.

It is not. Go looking for the sentence in SBA's rules and it is absent, and the absence is not an oversight in a thin rulebook. The same rulebook is unusually precise about who may prepare every other third party report in the file. It names credentials. It fixes who engages the preparer and who the report is addressed to. It bars reports prepared for the borrower or the seller. It requires a signed impartiality certification with an insurance floor attached. It does all of this for appraisals, for business valuations, for environmental investigations, and now for quality of earnings work. For the feasibility study it does none of it.

That gap matters more than a drafting curiosity, because it decides who carries the risk when a projection led deal defaults early. This piece sets out what each of the three federal regimes actually requires of a feasibility study preparer, where the strictest rules really live, and what a lender should put in the engagement letter given that the programme rules will not do it for them.

SBA: one permissive sentence

The entire codified basis for an SBA feasibility study is a single clause at 13 CFR 120.160(b): "SBA may require professional appraisals of the applicant's and principals' assets, a survey, or a feasibility study." Two features of that sentence do most of the work. The verb is may, not must. And the feasibility study appears in a list alongside a survey, which is to say as one discretionary item among several the agency might ask for. The provision dates to 61 FR 3235, published on 31 January 1996, and has been amended twice since, at 82 FR 39502 in August 2017 and 88 FR 21085 in April 2023. Neither amendment touched the feasibility language.

The operational rulebook is SOP 50 10 8, effective 1 June 2025, issued under Information Notice 5000-866746 and reissued with technical updates under Information Notice 5000-868665. It replaced SOP 50 10 7.1. Its successor, SOP 50 10 8.1, was issued on 14 August 2026 under Information Notice 5000-880695 and applies to applications that receive an SBA loan number on or after 1 October 2026, with the loan number timestamp rather than the application date as the trigger.

Across those editions the silence on the feasibility preparer runs in three directions at once.

There is no mandate. No loan class, asset type or borrower profile categorically requires a feasibility study in the SOP text. The 504 section lists circumstances in which one may be requested, including saturation of the market by industry and location, a unique or unproven market concept, a highly specialised project property, a project disproportionately large for the community it serves, and rapid growth accompanied by a matching rise in debt. Every one of those is discretionary. Claims that SBA requires a study for hotels, gas stations, car washes or self storage are market convention repeated until it sounded like regulation. No sentence in the SOP says it.

There is no preparer standard. The SOP names no credential, no licence, no minimum experience, no professional body and no content template for the feasibility study. The widely circulated five part framework, covering economic, market, technical, financial and management feasibility, is often attributed to SBA in industry writing. It is not SBA's. It is USDA's, codified in appendix A to subpart D of 7 CFR part 5001, and the attribution error is worth correcting whenever it appears in a scope section.

There is no independence standard. The words independent, third party and qualified are never attached to the feasibility study anywhere in the SOP. Nothing bars the borrower from preparing it, or an affiliate or owner of the borrower, or the franchisor whose royalty stream depends on the unit opening, or the general contractor, or the project architect, or the equipment vendor whose tunnel or dispensers the projections are built around, or a loan packager compensated on the transaction, or the lender's own staff. Nothing fixes who engages the preparer, who pays, who the report is addressed to, or how old the underlying data may be at the point of approval.

What SBA does regulate, in the same document

Set that against the treatment of every other third party report in the file, and the shape of the omission becomes clear.

Appraisals. Where an appraisal is required it must be an Appraisal Report prepared in compliance with the Uniform Standards of Professional Appraisal Practice, must be less than 12 months old at the date of the application for guaranty, and must identify the lender as the client or an intended user. The lender may not use an appraisal prepared for the seller or the applicant. The appraiser must be independent with no appearance of a conflict of interest, must hold no direct or indirect financial or other interest in the property or transaction, must be independent of the loan production function and must not be involved in approving the transaction. The appraiser must be state licensed or state certified, and must be state certified where the estimated value of the commercial real estate exceeds $1,000,000. On 504 transactions the report may name the third party lender as client with SBA as an intended user, and the CDC may not use an appraisal prepared for the applicant.

Special purpose collateral. The SOP defines special purpose property as a limited market property with a unique physical design, special construction materials, or a layout that restricts its utility to the specific use for which it was built. Its example list, expressly not all inclusive, covers hotels and motels, gas stations, car washes, bowling alleys, golf courses, marinas, nursing homes and assisted living facilities, funeral homes with crematoriums, theatres, wineries, auto service centres with pits and in ground lifts, and cold storage facilities where more than 50 per cent of the square footage is equipped for refrigeration. For these the lender must obtain an independent appraisal performed by a Certified General Real Property Appraiser who has completed no fewer than four going concern appraisals of equivalent special use property within the last 36 months, identified in the qualifications section of the report. The appraisal must allocate separate values to land, building, equipment and intangible assets, and SBA states it has not accepted and will not accept a Restricted Appraisal Report.

That list is the point. Those are precisely the asset classes on which a feasibility study is expected in practice, and SBA has attached a counted experience test, a credential and a conflicts rule to the appraiser working on them while attaching nothing at all to the analyst projecting the revenue the appraisal capitalises.

Business valuations. Where the amount financed less the appraised value of real estate and equipment exceeds $250,000, or where buyer and seller are closely related, the lender must obtain an independent business valuation from a Qualified Source, meaning a person who regularly receives compensation for business valuations and holds one of a short list of named accreditations. The valuation must be requested by and prepared for the lender, and a valuation prepared for the applicant or the seller may not be used. Under SOP 50 10 8.1 the lender self valuation tier disappears for change of ownership transactions altogether.

Environmental investigations. This is the sharpest contrast in the entire rulebook and it deserves stating on its own. Appendix 5 to SOP 50 10 8 is a mandatory, non alterable reliance letter. In signing it, the environmental professional authorises the lender and SBA to use and rely on the investigation, certifies errors and omissions insurance with minimum cover of $1,000,000 per claim, waives any dollar limitation on liability up to $1,000,000 and any time limitation other than statutes of limitation, waives any right to indemnification from the lender and SBA, and certifies impartiality and independence. A reliance letter is required even where the report is already addressed to the lender. There is no equivalent form for the feasibility study. There is no reliance machinery of any kind for the feasibility study.

Quality of earnings. SOP 50 10 8.1 moves change of ownership underwriting into a new appendix 15 and, for business purchase prices of $3,000,000 or more, requires a quality of earnings report ordered by the lender. The same edition sets a 1.25x debt service coverage floor for initial acquisitions, owner buyouts and ESOP transactions, measured on trailing results, with post closing projections not usable for that test, while business expansions remain at 1.15x. The SBA acquisition report stack planner works the same tests on a file by file basis. Elsewhere the smallest loans now carry their own floor: 7(a) Small Loans at or below $350,000 must show coverage of at least 1.10:1 on a historical or projected basis, under Procedural Notice 5000-876777 of 20 February 2026.

Four separate third party reports, four separate sets of rules about who may prepare them and for whom. The most recent of the four was written in August 2026. Whatever else can be said about the feasibility gap, it is not that SBA has never got round to the question.

USDA: the opposite drafting choice

The clearest evidence that the SBA position is a choice rather than an accident is that another federal credit programme faced the same question and answered it in writing, twice, in both directions.

The controlling rule for USDA's guaranteed programmes, covering Business and Industry, Community Facilities, the Rural Energy for America Program and Water and Waste Disposal, is 7 CFR part 5001, which took effect on 1 October 2020 under a source note at 85 FR 42518. It defines the deliverable and the preparer in the same section. A feasibility study is "a report including an opinion or finding conducted by an independent qualified consultant(s) evaluating the economic, market, technical, financial, and management feasibility of the proposed project or operation in terms of its expectation for success as outlined in appendix A to subpart D of this part." A qualified consultant is "an independent third-party person possessing the knowledge, expertise, and experience to perform the specific task required." The same definitions section separately defines conflict of interest, expressly including a person acting as a compensated agent of both the borrower and the lender on the same guaranteed loan.

The triggers are codified rather than left to convention. For Business and Industry, section 5001.306 requires a feasibility study prepared by an independent qualified consultant acceptable to the Agency for guaranteed loans greater than $1,000,000 to a new business, with scope set by the Agency according to the complexity of the project. Below that threshold, and for existing businesses, the Agency may require one where the lender's analysis is insufficient. For Community Facilities, section 5001.304 runs on two tracks: a financial feasibility analysis, which may be prepared by the lender itself, and a full feasibility study by an independent qualified consultant, required for guaranteed loans greater than $1,000,000 to a new entity or an entity conducting a new activity. Projections for assisted living, skilled nursing and similar residential facilities must be based on no more than 90 per cent occupancy. For the Rural Energy for America Program, section 5001.307(d) requires a feasibility study only for renewable energy system projects and only where the lender or the Agency deems it necessary, with the technical report carrying the routine burden instead.

USDA also tells the lender what to do with borrower projections rather than leaving it to prudence. Section 5001.202 requires that financial projections deviating from historical performance be substantiated and documented, that projections be consistent with past performance, and that increases to revenues, margins or profitability be reasonable and substantiated in the analysis. Section 5001.303(b) requires projections running through a minimum of two years of the project performing at full operational capacity or stable operations. The independent study is the codified mechanism by which those projections get tested by someone other than the party making them.

The most explicit interested party bar in any of the three regimes sits in the Community Facilities direct loan rule. Section 1942.17 requires the financial feasibility report, in the circumstances it describes, to be prepared by a qualified firm or individual "not having a direct interest in the management or construction of the facility." And in the same part, for fire, rescue and other small community facilities, section 1942.116 expressly permits the applicant to prepare its own feasibility report on Form RD 1942-54. USDA drew a line by project size and wrote both sides of it: above the line an interested party is barred, below it the applicant may write its own. That is what a considered answer to this question looks like. SBA's rulebook contains neither side.

Two pieces of oversight history show what the rule is for. In August 1999 the Government Accountability Office examined 24 loss generating Business and Industry borrowers and found that the agency had not followed its own requirements on 18 of them, with 11 loans missing feasibility studies that officials should have obtained, three carrying studies with significant flaws and four questionable. In September 2000 USDA's Office of Inspector General reported on a $7 million guaranteed loan on which the borrower had prepared the appraisal the lender used to demonstrate adequate collateral. The borrower furnished valuation put the machinery and equipment at $4,227,995. A later forced liquidation appraisal put it at $593,725, and the projected loss to the government was about $4.2 million. That case concerned an appraisal rather than a feasibility study, but the mechanism is identical and it is the mechanism the independence rules exist to prevent.

One correction while on USDA, because it circulates widely. There is no codified shelf life, expiry or staleness limit for a USDA feasibility or market study. The often quoted 90 day rule at section 5001.303 governs the currency of borrower and guarantor interim financial statements, not the age of market data or of the study itself.

HUD: two programmes, two answers

HUD runs the most demanding market study regime in federal lending and, within the same department, the clearest counterexample to it.

For multifamily mortgage insurance the controlling document is the Multifamily Accelerated Processing Guide, handbook 4430.G, issued in December 2020 with a revision dated 19 March 2021 and in full effect from 18 March 2021. It has been amended since by mortgagee letter rather than replaced. Chapter 7 is titled Valuation and Market Analysis, and its structure answers the question by itself: section 7.2 covers the selection of appraisers and market analysts, and section 7.3 sets qualifications for each in separate subsections. Two roles, separately qualified, both engaged by the lender rather than the borrower.

HUD's own briefing on the chapter describes the intent as an independent analysis by the appraiser and by the market analyst, with the market analyst re-analysing the impact of the appraiser's rent conclusions and any discrepancies described and detailed by the lender. This is a deliberate change of direction. The 2002 edition of the guide expressly permitted the appraisal and the market analysis to be performed by the same person or entity. The 2016 edition required that the appraiser and the market analyst have no identity of interest with the borrower or sponsor. The current edition builds two independent analyses that must be reconciled against each other on the record.

The market study content requirements are equally specific: an executive summary, a project description, a defined primary market area, economic and demographic analysis, current housing market conditions, the competitive pipeline, a demand estimate and conclusions, with HUD named as an intended user. The effective date is the date of site inspection, or the date the analyst completes research on competitive properties within 30 days of it. The study may be no more than 120 days old at pre-application and no more than 180 days old at issuance of the firm commitment. A balanced market is defined at 5 per cent vacancy and the absorption period runs to 95 per cent occupancy. Compare that to SBA, which sets no age limit on a feasibility study at all, and the difference in posture is hard to miss.

Then there is Section 232, the residential care and skilled nursing programme, governed by handbook 4232.1 REV-1, effective 19 January 2017. Chapter 5 runs the other way on the central question. "Market studies must be included in all appraisal reports," it provides, and "The market study will be authored by the same person(s) who produced the appraisal report and the conclusions carried throughout the appraisal report." The handbook notes the change from earlier practice directly: in the past appraisal reports and market studies were required to be separate documents, and now single reports are encouraged.

What Section 232 does not relax is who that person may be. "The appraiser must be independent of and may not be affiliated with the loan originator, broker, developer, borrower, lender, or any individual or institution involved in any other financial role in the application." And on ordering: "The appraisal report must be ordered and paid for by the Lender and not by the originator, broker, developer, or Borrower," with the borrower permitted to reimburse the lender through organisational fees. The lender is responsible for selecting and approving appraisers, who must be Certified General Appraisers in the state where the property sits. Remedies for a non compliant report run from a warning letter to the lender or appraiser, through limited denial of participation, to referral of the lender to the Mortgagee Review Board and referral of the appraiser to the state regulatory agency. New construction, substantial rehabilitation and 241(a) applications require a complete market study inside the appraisal, while 223(f) refinances may use a truncated market analysis where the stated conditions are met.

Same department, two structures, both stricter than SBA on the only questions that matter: who may write it, who orders it and who pays.

The regime nobody calls a feasibility rule

The strictest independence architecture in this field is not labelled feasibility anywhere. It is appraisal independence, and it reaches feasibility work sideways.

For supervised depository institutions, the Interagency Appraisal and Evaluation Guidelines, published at 75 FR 77450 on 10 December 2010 by the banking agencies jointly, set the structure. Appraisers "must be independent of the loan production and collection processes and have no direct, indirect or prospective interest, financial or otherwise, in the property or transaction," and those standards of independence "also should apply to persons who perform evaluations." Reporting lines for staff who order, review and accept valuations must be independent of loan production. On selection the guidelines are blunter still. "An institution or its agent must directly select and engage appraisers." "Independence is compromised when a borrower recommends an appraiser or a person to perform an evaluation. Independence is also compromised when loan production staff selects a person to perform an appraisal or evaluation for a specific transaction." And: "An institution's use of a borrower-ordered or borrower-provided appraisal violates the Agencies' appraisal regulations." The prohibited conduct list includes communicating a predetermined, expected or qualifying estimate of value, specifying a minimum value requirement, conditioning compensation on loan consummation, and failing to compensate a person because a property was not valued at a certain amount.

The professional standards run in parallel. Under the 2024 edition of USPAP, effective 1 January 2024, an appraiser must perform assignments with impartiality, objectivity and independence and without accommodation of personal interests, must not perform an assignment with bias, must not advocate the cause or interest of any party or issue, and must not accept an assignment that includes the reporting of predetermined opinions and conclusions. Compensation may not be contingent on the reporting of a predetermined result, on a direction in assignment results that favours the cause of the client, on the amount of a value opinion, on the attainment of a stipulated result, or on the occurrence of a subsequent event related to the appraiser's opinions. Services performed on the subject property in the preceding three years must be disclosed, and Standards Rule 2-3 requires a signed certification of no present or prospective interest, no bias and non contingent compensation.

Here is where it touches this work directly. Under Advisory Opinion 21, a market study or feasibility analysis performed by someone acting as an appraiser is appraisal practice, and remains subject to the Ethics, Competency, Scope of Work and Jurisdictional Exception Rules even where it produces no opinion of value. Standards 4 and 5, which had covered appraisal consulting, were retired with the 2020-21 edition. A non appraiser preparing the identical market study is not bound by USPAP at all unless the client requires it by agreement. The same analysis, on the same site, for the same lender, is governed or ungoverned depending on who signs it.

Two limits should be stated honestly. The statutory anti coercion provisions, at 15 U.S.C. 1639e and Regulation Z at 12 CFR 1026.42, prohibit causing a valuation to be based on any factor other than the preparer's independent judgment through coercion, extortion, inducement, bribery or intimidation, but they reach consumer credit secured by the consumer's principal dwelling and so do not govern commercial feasibility work. And the interagency guidance binds supervised depository institutions. It does not reach SBA's non depository lending companies or the CDCs, which sit under SBA's own credit risk oversight, and nothing in that oversight requires an independent market or feasibility study or reaches the quality of the third party analysis behind any single credit.

Which brings us to the most useful passage in federal supervisory literature on this subject, from the OCC's Commercial Real Estate Lending handbook, version 2.0 of March 2022, under the heading Determining Project Feasibility:

"Prudent underwriting includes determining the project's feasibility. Feasibility describes the likelihood that the project as proposed will be economically successful. Feasibility studies can be included as part of an independent appraisal or as a separate analysis; however, feasibility studies commissioned by the borrower may be biased and should be critically reviewed. While studies and appraisals can be helpful in providing useful information and analysis, the bank should conduct its own analysis of the project. Further, the person conducting the analysis of the project should have the requisite knowledge and skills to assess project feasibility."

That is the honest supervisory position. The borrower commissioned study is permitted, discounted for bias, and never a substitute for the bank's own work. Where the risk concentrates, the same handbook goes further and asks for independence outright, stating that the bank should be able to demonstrate, through a feasibility study or market analysis conducted independently of the borrower and the bank, that all units collateralising the loan are expected to be constructed and sold within 12 months, and that the feasibility study or the market analysis in the appraisal should support the absorption period for developed lots. On the projections themselves it is direct: credible pro forma projections are a key determinant of a project's feasibility, and the analysis should include stress testing across scenarios.

The one statute that names the preparer

There is a single federal statute that puts a disinterested party test directly on the preparer of a market study rather than on an appraiser, and it sits in the tax code. Section 42(m)(1)(A)(iii) of the Internal Revenue Code conditions a low income housing credit allocation on "a comprehensive market study of the housing needs of low-income individuals in the area to be served by the project" conducted "before the credit allocation is made and at the developer's expense by a disinterested party who is approved by such agency."

Three levers sit in that one sentence. The preparer must be disinterested. The allocating agency must approve the preparer. The developer pays, which the statute treats as compatible with independence provided the first two conditions hold. State allocating agencies have built the operating machinery on top of it: approved analyst lists, signed certifications that the analyst holds no interest in the development and no relationship with the ownership entity, and in the stricter states a certification that compensation is not contingent on the project receiving a reservation or allocation, with removal from the approved list as the sanction.

The reason it belongs in this article is the contrast. A rule of exactly the kind everyone assumes SBA has, aimed exactly at the person writing the study, exists in federal law. It was written for a tax credit programme rather than a lending programme, and nobody has written its equivalent for the loan file.

What this means for the credit file

If the programme rules will not supply the independence standard, something has to, and in practice two things do: the lender's own duty, and the engagement letter.

The duty is codified at 13 CFR 120.150. Loans must be so sound as to reasonably assure repayment, and lenders and CDCs must use appropriate and prudent generally acceptable commercial credit analysis processes and procedures consistent with those used for their similarly sized non SBA guaranteed commercial loans. That is where the obligation lives, and it is an obligation to underwrite well rather than to collect a particular document.

The consequence of underwriting badly is set out at 13 CFR 120.524, under which SBA is released from liability on its guarantee, in whole or in part and within its exclusive discretion, on ten listed grounds. Two of them catch a projection led early default: material failure to comply with a Loan Program Requirement, and failure to make, close, service or liquidate a loan in a prudent manner. There is no limb for failing to obtain a feasibility study, because there is no requirement to obtain one. The exposure arrives through the prudence door instead.

The purchase review is where it becomes concrete. For early default loans the guaranty purchase package requires the borrower's application, the credit memorandum and the documentation relied on to justify cash flow and loan approval, and states that where projections have been used the lender must include the supporting documentation. A feasibility study is not a listed item on that package. A file containing borrower projections with nothing independent behind them is where the reviewer's finding writes itself.

The inspector general record shows the pattern rather than the label. The High Risk 7(a) Loan Review Program has run since 2014. Its September 2019 consolidated report reviewed eight early defaulted loans and found deficiencies justifying denial of the guaranty on five of them, totalling approximately $8.7 million, with recurring issues described as business valuations, affiliates, equity injection and repayment ability. An earlier report in the series reviewed five loans and justified denial on one of $917,107. The following year's report justified denial on four loans totalling nearly $2.7 million, bringing the cumulative programme total to 27 loans and $23.2 million reviewed, with recoveries recommended on 11 of them totalling more than $8.5 million. More recently, a March 2026 report found the agency's risk mitigation framework did not screen or fully screen three of six eligibility requirements, leaving limited assurance on 73,302 loans representing about $32 billion in questioned costs, which SBA agreed to flag for review at guaranty purchase. In none of it does a missing or conflicted feasibility study appear as a named deficiency. It appears as repayment ability, every time.

The second thing supplying the standard is the engagement letter, and it does more work here than any professional standard does. Reliance by a lender that did not commission the report is governed by the framework at section 552 of the Restatement (Second) of Torts, under which a professional who supplies information for the guidance of others in their business transactions is liable for pecuniary loss to the person, or the limited group of persons, for whose benefit and guidance the information was intended, in a transaction the preparer intended to influence. Most states follow that limited group approach. A minority requires privity or something close to it, and a smaller minority extends liability to all reasonably foreseeable users. Courts applying it to valuation work have held that the lender who engaged the preparer may sue while a purchaser or a loan assignee who did not may not. The named intended user, fixed at the time of the assignment, is what converts a reader into a party with standing.

That has three practical consequences on an SBA or USDA file. First, who pays is close to irrelevant to the reliance question, while who is named as intended user is decisive. Second, a borrower commissioned study addressed to the lender is fully compliant, since SBA imposes no addressee rule and USDA requires only that the consultant be acceptable to the lender and the Agency, which naming both satisfies. Third, the timing is unforgiving: USPAP does not permit an appraiser to readdress a completed report or add an intended user afterwards, and while feasibility work has no equivalent rule, the safer practice is to name the intended users at the outset rather than to rely on a letter written after the conclusions are known. The environmental market solved the same problem with routine transferable reliance letters, which is why lenders now expect the same instrument from feasibility consultants even though no rule requires anyone to offer one.

What to require when the rules do not

For lenders and CDCs, the gap is closed at the engagement stage or not at all. Seven provisions do the work:

Name the intended users and the intended use on the face of the engagement letter and the report, covering the lender, and where applicable the CDC, SBA or the USDA agency, together with the specific credit decision the study is intended to influence.

Address the report to the lender even where the borrower pays, and say so expressly, so that payment cannot later be argued to define the client to the lender's exclusion.

Require a transferable reliance letter available to a named takeout lender, participant or guarantor, on the environmental model rather than the appraisal model.

Require an affirmative statement of impartiality: no financial, brokerage, development or ownership interest in the project, no relationship with the borrower beyond the engagement, and compensation that is not contingent on loan approval or on any stated conclusion. Nothing in the SBA rules supplies this, so the engagement letter must.

Use affirmative intended user language rather than negative sole use disclaimers, which courts have declined to enforce against third parties.

Align any limitation of liability with the preparer's errors and omissions cover, and carve out fraud, gross negligence and wilful misconduct so that the cap survives challenge.

Require disclosure of the extraordinary assumptions and hypothetical conditions supporting any as complete or as stabilised conclusion, so the reliance is bounded and the reviewer can see what the conclusion rests on.

None of that is required by SBA. All of it is what the appraisal, environmental and HUD regimes already require of the reports sitting next to the feasibility study in the same credit file, and it is what a reviewer will look for two years later when the loan defaults inside 18 months and the question becomes whose numbers those were. How that engagement is actually run, from the inputs the borrower must supply to delivery into the credit file, is set out in inside a feasibility study engagement. The prior question, whether a study is required on the file at all, is answered in when the feasibility study is waived.

To check whether a specific loan needs a study, which other reports the file carries and how each section should be prepared, use the Feasibility Study Methodology Navigator.

For the cross-asset framework, demand regimes, valuation methods and reviewer tests, see the 2026 Feasibility Methodology Atlas.

Frequently asked questions

Does SBA require a feasibility study to be independent? No. The only codified basis is 13 CFR 120.160(b), which says SBA may require a feasibility study, and neither SOP 50 10 8 nor SOP 50 10 8.1 attaches the words independent, third party or qualified to the preparer. Independence on SBA files is a lender and market convention, not a regulatory requirement.

Who is allowed to prepare an SBA feasibility study? Anyone, as far as the rules are concerned. The SOP names no credential, licence or minimum experience, and does not bar the borrower, an affiliate, the franchisor, the general contractor, the project architect, the equipment vendor or a compensated packager from preparing it. That is a striking omission in a rulebook that bars the use of an appraisal or a business valuation prepared for the borrower or the seller.

Can the borrower pay for the study the lender relies on? Yes, and it is the norm. SBA imposes no rule on who engages or pays for a feasibility study, and USDA requires only that the consultant be independent, qualified and acceptable to the lender and the Agency. What matters for the lender's ability to rely on the report, and to sue on it, is whether the lender is named as an intended user, not who paid the invoice.

Does USDA have a different rule? Yes, and it is the sharpest contrast in federal lending. 7 CFR part 5001 defines a feasibility study as a report conducted by an independent qualified consultant, defines a qualified consultant as an independent third party with the relevant knowledge, expertise and experience, and requires such a study for Business and Industry loans over $1,000,000 to a new business and for Community Facilities loans over $1,000,000 to a new entity or new activity.

What does "qualified consultant acceptable to the Agency" mean in practice? It is a dual test. The consultant must satisfy the codified independence and competence definition, and the Agency must accept the individual or firm for the specific project. Scope for Business and Industry studies is set by the Agency according to the complexity of the project, so confirming both the preparer and the scope with the state office before work begins avoids the most common cause of resubmission.

Why does HUD require the market analyst and the appraiser to be different people on some programmes and the same person on others? Because the two programmes solve different problems. The multifamily accelerated processing guide builds two separately qualified roles whose rent and demand conclusions are reconciled against one another, which suits new construction where the rents do not yet exist. Section 232 requires the market study to sit inside the appraisal and be authored by the same person, which suits an operating healthcare business valued as a going concern. Both regimes bar the borrower, developer and broker from ordering or paying for the work.

How old can the data in a feasibility study be? Under SBA rules, there is no limit, because there is no rule. HUD sets explicit limits on the multifamily side, where the market study may be no more than 120 days old at pre-application and 180 days at firm commitment. USDA sets none for the study itself, and the 90 day rule frequently cited in this context governs the currency of borrower and guarantor interim financial statements rather than market data.

If SBA does not require independence, why do lenders insist on it? Because the consequence sits with the lender rather than with the borrower. SBA may be released from its guarantee where a lender failed to make a loan in a prudent manner, and the inspector general's early default reviews return repeatedly to repayment ability supported by nothing but the borrower's own projections. Supervisory guidance says the same thing more plainly: a study commissioned by the borrower may be biased, should be critically reviewed, and does not relieve the lender of doing its own analysis.

Sources

1. 13 CFR 120.150, SBA lending criteria
2. 13 CFR 120.160(b), Loan conditions
3. 13 CFR 120.524, When SBA is released from liability on its guarantee
4. SBA SOP 50 10 8, Lender and Development Company Loan Programs, effective 1 June 2025, including Appendix 5, Reliance Letter
5. SBA Information Notice 5000-866746, Issuance of SOP 50 10 8, 21 April 2025
6. SBA Information Notice 5000-868665, Issuance of SOP 50 10 8 with Technical Updates, effective 29 May 2025
7. SBA Information Notice 5000-880695, Issuance of SOP 50 10 8.1, 14 August 2026, effective 1 October 2026
8. SBA Procedural Notice 5000-876777, 20 February 2026
9. SBA Notice 5000-19007, Appraisal Requirements, 26 March 2019
10. SBA, Regular 7(a) Guaranty Purchase Package Tabs
11. SBA Office of Inspector General Report 17-18, The OIG High Risk 7(a) Loan Review Program
12. SBA Office of Inspector General Report 18-26, Consolidated Results of the OIG High Risk 7(a) Loan Review Program, 27 September 2018
13. SBA Office of Inspector General Report 19-22, Consolidated Results of the OIG High Risk 7(a) Loan Review Program, 26 September 2019
14. SBA Office of Inspector General Report 26-01, Top Management and Performance Challenges Facing the SBA in Fiscal Year 2026, 18 December 2025
15. SBA Office of Inspector General Report 26-07, SBA's Screening of 7(a) Loan Applications Under its Risk Mitigation Framework, 11 March 2026
16. 7 CFR 5001.3, Definitions
17. 7 CFR 5001.202, Lender's credit evaluation
18. 7 CFR 5001.303, Applications for loan guarantee
19. 7 CFR 5001.304, Specific application requirements for Community Facilities projects
20. 7 CFR 5001.306, Specific application requirements for Business and Industry projects
21. 7 CFR 5001.307, Specific application requirements for Rural Energy for America Program projects
22. Appendix A to Subpart D of 7 CFR Part 5001, Feasibility Study Components
23. 7 CFR 4280.103, Definitions
24. 7 CFR 1942.17, Community facilities, economic feasibility
25. 7 CFR 1942.116, Fire and rescue and other small community facilities projects, and Form RD 1942-54
26. 7 CFR 3565.254 and 7 CFR 3565.303, Guaranteed Rural Rental Housing Program
27. USDA proposed rule, Multifamily Housing Guaranteed Rural Rental Housing Program Requirement To Submit a Market Study, 30 June 2025, docket RHS-24-MFH-0024
28. GAO/RCED-99-249, Rural Development: Rural Business-Cooperative Service Business Loan Losses, 25 August 1999
29. USDA Office of Inspector General Report 34004-06-Hy, Business and Industry Guaranteed Loan, Harrisburg, Pennsylvania, 27 September 2000
30. HUD Multifamily Accelerated Processing Guide, Handbook 4430.G, December 2020 edition revised 19 March 2021, Chapter 7
31. HUD Multifamily Accelerated Processing Guide, January 2016 edition, Chapter 7
32. HUD Multifamily Accelerated Processing Guide, March 2002 edition, Chapter 7
33. HUD Handbook 4232.1 REV-1, Section 232 Handbook, Section II Production, Chapter 5, Appraisal Reports and Market Studies, effective 19 January 2017
34. Uniform Standards of Professional Appraisal Practice, 2024 edition, Ethics Rule, Competency Rule and Standards Rule 2-3
35. USPAP Advisory Opinion 21, Appraisal Practice
36. Appraisal Standards Board, retirement of Standards 4 and 5 with the 2020-21 edition
37. Interagency Appraisal and Evaluation Guidelines, 75 FR 77450, 10 December 2010, Sections V and VI
38. 12 CFR 1026.42, Regulation Z, valuation independence
39. 15 U.S.C. 1639e, Appraisal independence requirements
40. OCC Comptroller's Handbook, Commercial Real Estate Lending, Version 2.0, March 2022
41. 26 U.S.C. 42(m)(1)(A)(iii)
42. Restatement (Second) of Torts, Section 552
43. Bily v. Arthur Young and Company, 3 Cal. 4th 370 (1992)
44. Credit Alliance Corporation v. Arthur Andersen and Company, 65 N.Y.2d 536 (1985)