Feasibility Study Services and Methodology for SBA, USDA and Conventional Lenders
UnionMetric prepares independent, lender-grade feasibility studies that answer one question a credit committee cannot answer from an appraisal: will this project generate enough cash flow to stabilize and repay its debt? Every study follows the same seven-stage method, is calibrated to the loan program it supports, and is written to survive SBA, USDA and conventional credit review. USPAP commercial appraisals are available as a companion service.
What is a lender-grade feasibility study?
A lender-grade feasibility study is an independent third-party analysis of whether a proposed or expanding business can generate sufficient, sustainable cash flow to operate, stabilize and service the debt requested. It tests the project against its market, its competition, its site and its costs, and concludes with a supported finding a lender can rely on. USDA defines the scope through five components, and we apply the same five components to every study, whatever the loan program.
| Component | What it tests | What the lender reads |
|---|---|---|
| Economic | Local economy, employment, population and income trends that drive demand | Whether the trade area can support the project through a cycle |
| Market | Demand, competitive supply, pricing and capture | Whether projected revenue is achievable |
| Technical | Site, access, utilities, design, construction cost and schedule | Whether the project can be built as budgeted |
| Financial | Pro forma, stabilized NOI, DSCR, sensitivity and break-even | Whether cash flow covers debt service with margin |
| Management | Operator experience, staffing plan and controls | Whether the people can execute the plan |
The five components follow 7 CFR Part 5001, Appendix A to Subpart D (Feasibility Study Components).
Proof at a glance
Recent studies delivered for lenders, CDCs and developers.
Resort
Destination demand calendar supports the projected occupancy and ADR at the resort's positioning.
Wedding Venue
The PMA's annual wedding pipeline supports the projected booking calendar at the assumed average revenue per event.
Restaurant
Aggregate PMA disposable income and away-from-home food spending support the assumed unit volumes.
Healthcare
The PMA's age-and-payor-qualified patient pool supports the projected case volumes.
USDA Rural Development
Rural eligibility verified as the threshold gate before the analytical work began, per USDA Rural Development standards.
USDA Rural Development
CF eligibility and rural service-area definition verified before the analytical work began.
How we build a feasibility study: seven stages
1. Scoping and program calibration
We confirm the loan program (SBA 7(a), SBA 504, USDA B&I, REAP, Community Facilities or conventional), the lender or CDC, the total project cost and the requested loan amount before any analysis starts. The program sets the review standard: what the lender must document, which coverage tests apply and which components the study must address. Scope, delivery date and fee are fixed in the engagement letter.
2. Primary market area
We define the primary market area from drive time, physical and competitive barriers and the actual origin of customers for the asset type, not from a default radius. A self-storage trade area, a travel center trade area and a hotel's demand generators behave differently, and the boundary is supported in the report with a map and the reasons for each edge. Every demand and supply figure downstream is measured inside this boundary.
3. Demand and capture rate
We quantify demand from population, households, income, traffic counts, visitation or room-night generators, as the asset requires, and project it over the study horizon. The subject's share is derived as a capture or penetration rate reasoned from the subject's own position against its competitors and supported by public industry data. The rate is shown with its derivation so the lender can test it.
4. Competitive supply and saturation
We inventory existing and pipeline competitors inside the primary market area: location, size, pricing, quality and performance where observable. Supply is compared with demand to measure saturation and the room the market leaves for the subject. Planned and permitted projects are included, because a feasible project today can be an oversupplied one at stabilization.
5. Technical, site and cost feasibility
We review the site, zoning, access, visibility, utilities and the development budget and schedule against the program. Construction and soft costs are tested for completeness and reasonableness, and gaps that would change the capital stack are stated, not assumed away.
6. Pro forma, stabilized NOI, DSCR and sensitivity
We build revenue and expense projections from the demand and pricing analysis, with ramp-up to stabilization, and calculate stabilized NOI and the debt service coverage ratio on the proposed loan terms. Sensitivity tables show coverage under lower occupancy or volume, lower pricing and higher costs, and a break-even analysis shows how far performance can fall before debt service is missed.
7. Conclusion, assumptions and limiting conditions
The study ends with a supported finding on feasibility as proposed, any conditions that would change it, and a complete list of assumptions with their sources. Limiting conditions are stated in plain terms so the reader knows exactly what the conclusion relies on.
Tell us your program and asset. We will confirm the standard that applies.
When SBA and USDA require a feasibility study
Requirements differ by program, and several are discretionary rather than mandatory. The table states what the regulation says, not what the market assumes.
| Program | What the rule says | Practical trigger |
|---|---|---|
| SBA 7(a) and 504 | 13 CFR 120.160(b): "SBA may require professional appraisals of the applicant's and principals' assets, a survey, or a feasibility study." The study is discretionary. | Lenders and CDCs commonly require one for start-ups, new construction, changes of use and special-purpose property such as hotels, car washes and gas stations. |
| SBA 504 equity | 13 CFR 120.910: borrower contribution of at least 10 percent, rising to 15 percent for a business operating two years or less or for a limited or single purpose building, and 20 percent where both apply. | New and special-purpose projects carry higher equity and closer scrutiny of projected cash flow. |
| USDA B&I guaranteed | 7 CFR 5001.306(a)(3)(i): for guaranteed loans greater than $1,000,000 to a new business, a feasibility study prepared by an independent qualified consultant acceptable to the Agency is required. | Mandatory above the threshold for new businesses; the Agency may also require a study where project information is not sufficient. |
| USDA REAP and Community Facilities guaranteed | 7 CFR 5001.306(a)(3): the Agency may require a feasibility study when the lender's analysis, the borrower's business plan or the project information is not sufficient. | Commonly required for new facilities and projects without operating history. |
| Conventional | No federal rule. | Set by the lender's credit policy, typically for construction, start-up and special-purpose loans. |
SBA SOP 50 10 8.1 applies to loans approved on or after October 1, 2026. Final requirements are set by the lender, the CDC and the agency on each transaction. Last reviewed: October 2026.
Feasibility studies by asset class
SBA feasibility study
Program-calibrated studies for SBA 7(a) and 504 loans, built around stabilized cash flow and DSCR on the proposed terms, with sensitivity cases a credit committee can test.
USDA feasibility study
Studies covering all five USDA components under 7 CFR Part 5001 for B&I, REAP and Community Facilities guarantees, prepared by an independent consultant.
RV park feasibility study
Transient, seasonal and annual site mix, nightly and monthly rates by season, and occupancy against the campground supply within the travel corridor.
Multifamily feasibility study
Rent comparables, absorption and lease-up pace for market-rate, mixed-use and workforce housing, tested against the pipeline.
Gas station feasibility study
Fuel gallons and inside sales projected from traffic counts, access and competing stations, with fuel margin and store sales tested separately.
Car wash feasibility study
Cars per day, membership mix and pricing against competing tunnels within drive time, with ramp-up to stabilized volume.
Data center feasibility study
Power availability and delivery timing, absorption and pricing per kilowatt for colocation, wholesale and enterprise demand.
Hotel feasibility study
Occupancy, ADR and penetration against a defined competitive set, with demand segmented by commercial, leisure and group generators.
Self-storage feasibility study
Square feet per capita tested against actual occupancy and the pipeline, not a national average, with unit mix and rate positioning.
Wedding venue and event feasibility study
Bookable dates by season, event capacity and per-event revenue against competing venues in the trade area.
Brewery and distillery feasibility study
Taproom traffic separated from distribution volume, so the plan does not depend on wholesale growth it cannot document.
Fitness center and gym feasibility study
Membership penetration of the trade-area population and retention-based revenue, not gross sign-ups.
RV and boat storage feasibility study
Registered RVs and boats in the trade area, competing supply and rate positioning for outdoor, covered and enclosed spaces.
Assisted living feasibility study
Age and income-qualified demand for assisted living and memory care, penetration against existing beds, and the private-pay and payer mix.
Feasibility study vs. appraisal vs. market study
Lenders often need more than one of these documents. They answer different questions and cannot substitute for each other.
| Question | Feasibility study | Appraisal | Market study |
|---|---|---|---|
| Core question | Will the project generate enough cash flow to succeed and repay the debt? | What is the property or going concern worth on a stated date? | What are demand, supply and pricing conditions for this property type in this market? |
| Time orientation | Forward-looking projections, ramp-up and sensitivity | A point-in-time value (as is, as complete, as stabilized) | Current and near-term market conditions |
| Who prepares | An independent qualified third party | A state-certified general appraiser for federally related commercial lending | An analyst or appraiser |
| Who engages | The borrower or the lender, depending on the program | The lender or its agent for regulated lending | Either |
| What the lender uses it for | Repayment ability, DSCR | Collateral, loan to value, value allocation | Supports both |
The two documents are not interchangeable. USDA's legacy Business and Industry rule states it directly: "The income approach of an appraisal is not an acceptable feasibility study" (7 CFR 4279.150). Appraisal practice defines a feasibility analysis as a study of the cost-benefit relationship of an economic endeavor, a separate assignment from an opinion of value.
Commercial appraisal services
For lenders that need a valuation alongside the study, we provide USPAP appraisals of commercial and special-purpose property, prepared and signed by the state-certified general appraiser named in each report.
What an appraisal proves
An appraisal states the value of a defined property interest on a stated date. The appraiser develops the sales comparison, income capitalization and cost approaches as the assignment requires and supports a highest and best use conclusion. It measures collateral, not the viability of the business plan.
Going-concern and special-purpose property
Hotels, gas stations, car washes, RV parks and senior housing are often valued as going concerns. The report separates the value of the real property, the furniture, fixtures and equipment, and any intangible business value, because lenders size collateral on the real property and SBA 504 proceeds cannot finance goodwill.
SBA and USDA appraisal requirements
USDA (7 CFR 5001.203): real estate appraisals must meet FIRREA and USPAP Standards 1 and 2, must be performed by a State Certified General Appraiser licensed in the state where the property is located unless the Agency approves otherwise, and the lender must complete a technical review under USPAP Standards 3 and 4 before closing. SBA: an appraisal is required for commercial real estate acquired, refinanced or improved with loan proceeds above SBA thresholds, and special-purpose property requires an appraiser with going-concern experience in that property type.
Who orders the appraisal
For SBA, USDA and other loans from regulated institutions, the lender or its agent must select and engage the appraiser. An appraisal ordered by the borrower cannot serve as the collateral appraisal for those loans. Borrowers can still commission an appraisal for pricing, partnership or planning decisions. Lenders: engage us directly through the form below. Borrowers: ask your lender to engage us and we will coordinate the scope.
Appraisal property types
Apartment complexes and small residential income property, valued on rent comparables, income capitalization and sales of comparable buildings.
Going-concern valuations that separate site income, amenities and business value for parks and campgrounds.
Shopping centers, strip retail and freestanding stores, valued on lease terms, tenant credit and market rents.
Climate-controlled and drive-up facilities, valued on unit mix, occupancy, rate history and comparable sales.
Outdoor, covered and enclosed vehicle storage, valued on space mix, rents and market absorption.
Express tunnel, full-service and self-serve washes, with real property, equipment and business value allocated separately.
Fuel and c-store going concerns, with fuel and inside-sales income analyzed separately and the real property value isolated.
Limited, select and full-service hotels, with furniture, fixtures, equipment and business value deducted to isolate the real property.
Experiential hospitality and eco-lodge property, valued on unit revenue, seasonality and comparable resort performance.
Assisted living and memory care communities, with real property, equipment and operating business value allocated separately.
Appraisals are prepared by the state-certified general appraiser identified in each report, in conformity with the edition of USPAP in effect. For SBA, USDA and other loans from regulated institutions, the appraisal must be engaged by the lender. Acceptance of any appraisal or feasibility study is at the discretion of the lender and the agency. A feasibility study is not an appraisal, and an appraisal is not a feasibility study.
When you need both
Special-purpose property, start-ups, new construction, changes of use and major expansions usually need both documents: the appraisal to size the collateral and the feasibility study to show repayment. Straightforward acquisitions of established businesses are underwritten mainly on historical results, and there the appraisal carries more weight than projections. Where we prepare both documents for one project, they are separate reports under separate engagements, and the relationship is disclosed in each.
Independence, reliance and limiting conditions
UnionMetric has no financial interest in the projects it studies or appraises. Fees are fixed at engagement and are never contingent on loan approval, a value conclusion or a favorable finding. Reports are addressed to the client and may be relied on by the lender or CDC named in the engagement letter; additional reliance letters are available on request. Each report states its assumptions and limiting conditions in full.
Frequently asked questions
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