Case Study · Oregon · Pet Boarding & Daycare · SBA 7(a)
Pet Boarding & Daycare Feasibility Study, Oregon — An SBA 7(a) Worked Case
This is how our independent feasibility study company and feasibility consultant team analyzed a ground-up pet boarding, doggy daycare, and grooming facility underwritten to an SBA 7(a) credit, from trade-area pet-owning demand and the daycare-membership and boarding-occupancy ramp through the debt-service coverage a lender must document. It is a representative, anonymized worked example of the methodology — not a specific client deal — set in an affluent suburban submarket of the Portland, Oregon metro.
A ground-up pet-care resort on a suburban Oregon pad.
A sponsor came to our feasibility study company with a ground-up pet-care project and an SBA 7(a) lender that needed the projected cash flow independently tested before it would commit. The subject is a roughly 2.0-acre commercial pad in an affluent, dual-income suburban submarket of the Portland metro, carrying a 15,000-square-foot integrated facility: about 80 boarding suites and runs, licensed daycare capacity for roughly 140 dogs a day, and three grooming stations. The program is the dominant modern model — an integrated facility that cross-sells recurring daycare, episodic boarding, and appointment grooming rather than a single-line kennel.3
Because a pet boarding and daycare facility is a going-concern operating business rather than passive real estate, the lender's question is not “what is the dirt worth” but “can this specific site build the daycare membership, boarding occupancy, and margin to service this specific loan.”7 The purpose-built kennel is also a specialized, hard-to-re-tenant property, which is precisely the condition that turns a discretionary feasibility study into an expected one on a ground-up, no-operating-history deal.10 Our scope was the independent demand, capture, competition, ramp, and debt-service analysis that supports that credit.
Representative and anonymized. Every figure below is illustrative of a typical engagement of this type; the site, submarket, and parties are composited, not a real named borrower, address, or completed transaction.
Trade-area pet-owning demand, split two ways.
The demand read starts with pet-owning households and the two distinct drivers behind them: dual-income commuter density for recurring daycare, and affluent-traveler density for episodic boarding. The five-mile ring holds roughly 34,000 households in a high-income, dog-dense suburb.
Pet-humanization anchors the demand thesis. The American Pet Products Association reports that 71 percent of U.S. households own a pet and 53 percent own a dog, with total pet spending reaching $158 billion in 2025.2 Demand skews exactly toward this submarket's profile: dog ownership is highest among households earning $100,000 or more, among homeowners, and in the suburbs, where ownership runs near 71 percent.2 Applied to roughly 34,000 households, the ring supports on the order of 18,000 dog-owning households — a deep pool for both the recurring daycare base and episodic boarding. The two lines behave differently: daycare is subscription-like weekday revenue at roughly $25 to $40 per dog-day, while boarding is seasonal and occupancy-driven like a hotel at roughly $35 to $85 a night for standard suites and more for luxury.36 On the trade-area pet-owning base, commuter density, and travel propensity, the model supports a stabilized daycare line near $1.36 million, a boarding line near $0.86 million, and grooming and retail near $0.33 million.
| Demand driver | Basis | Supported figure |
|---|---|---|
| Trade-area households (5-mi ring) | ~34,000 HHs, affluent dual-income suburb | Rising pet-owning base |
| Pet-owning households | 71% own a pet; 53% own a dog → ~18,000 dog HHs2 | Primary demand pool |
| Daycare (recurring) | ~110 avg daily dogs vs 140 capacity (~79%) × ~$40/dog-day × ~310 days3 | ≈ $1.36M/yr |
| Boarding (episodic) | 80 suites × ~43% annual occupancy × ~$68 blended ADR6 | ≈ $0.86M/yr |
| Grooming & retail | Appointment grooming plus retail attach | ≈ $0.33M/yr |
Utilization and pricing logic grounded in APPA ownership data and franchise-level pet-care operating benchmarks; see sources 2, 3, and 6. Figures are illustrative of the engagement type.
A fragmented set with no integrated resort nearby.
Six competing pet-care operators sit within the trade area, but they are single-line and aging: boarding-only kennels, a daycare-only unit, a grooming salon, and a vet-attached boarding annex. The nearest full-service integrated resort is more than three miles away and already running at capacity.
| Competitor | Format | Capacity | Distance | Read |
|---|---|---|---|---|
| Competitor A | Independent kennel | ~40 runs | 1.2 mi | Boarding-led; dated, no daycare program |
| Competitor B | Doggy daycare only | ~60 dogs/day | 2.1 mi | No boarding; weekday-only |
| Competitor C | Franchised integrated | ~90 dogs, full-service | 3.4 mi | Strongest comp; near capacity, wait-listed |
| Competitor D | Veterinary + boarding | ~25 runs | 2.8 mi | Boarding secondary to the clinic |
| Competitor E | Grooming salon | Grooming only | 1.6 mi | No boarding or daycare |
| Competitor F | Independent kennel | ~35 runs | 4.2 mi | Rural-edge, aging plant |
Competitive set surveyed for the engagement; anonymized. Announced and permitted supply was scanned, not just the standing set, and Oregon's urban growth boundary rations developable commercial land.
The competitive picture is a fragmented, single-line set — consistent with a national market that remains overwhelmingly independent, with public and franchised operators holding five percent or less of the daycare-and-boarding segment.1 Only one operator inside the ring runs a genuine integrated program, and the nearest full-service franchised resort (Competitor C) sits more than three miles out and is already wait-listed. A rigorous study does not stop at the standing set: it scans announced and permitted supply, and here Oregon's urban growth boundary land-use system tightly rations the developable commercial land on which a competing resort could be built.15 The read is a genuinely undersupplied integrated niche — the subject fills a format gap rather than splitting a saturated trade area — with the standing caution that pet care is discretionary spending and more recession-sensitive than medical veterinary care.2
Oregon macro: divergent, and it must be read region by region.
Oregon is too internally divergent for a statewide assumption; the Portland metro, the Willamette Valley, Bend, the Coast, and Eastern Oregon behave as separate economies. A suburban Portland-metro pet-care deal is underwritten against its specific submarket, not a state average.
The state backdrop is mixed but workable for a suburban services business. Oregon carries no state sales tax, and the affluent Portland suburbs remain dual-income, high-ownership, and dog-dense — the profile daycare demand tracks. But Oregon growth has stalled to about 0.33 percent a year and is now entirely migration-driven, so a defensible pro forma does not lean on population tailwind; it leans on capturing an undersupplied format in an existing, affluent base.14 One concentration risk is specific and material: the Silicon Forest. Intel's Oregon headcount has fallen from a roughly 23,000 peak toward about 18,000, and underwriting a Washington County trade area on continued tech growth is the highest-conviction rejection in the state — so the study tests the trade area's employment diversification rather than assuming it.16
Two regulatory edges matter to this file. First, Oregon's first-in-the-nation statewide rent control caps existing-asset residential rent increases at 9.5 percent for 2026; it does not bind an owner-occupied pet-care pro forma directly, but it shapes the household cost-of-living backdrop and the disposable income behind discretionary pet spending.15 Second, and decisive for siting, Oregon's urban growth boundary system and local kennel zoning are strict: pet-care use typically requires a conditional use permit, with residential setbacks commonly running 100 to 500 feet and wastewater and drainage conditions for animal waste — the first hard gate before a deal advances.12 The financing channel is deep: the SBA Portland District Office covers 30 Oregon counties, Evergreen Business Capital anchors the 504 market, and active 7(a) lenders include Umpqua-Columbia, U.S. Bank, KeyBank, and Summit Bank; the July 4, 2026 decoupling of the 7(a) and 504 caps to $10 million combined further enlarges bankable deal size.16 A rural Oregon pet-care deal in a town under 50,000 would instead route through USDA Business & Industry via the Rural Development state office; this suburban subject sits squarely in the SBA 7(a) channel.11
Why the submarket carries both revenue lines.
Household income, dual-income commuting, and dog-ownership density point the same direction, and a cleared conditional use permit converts that demand into a facility that can actually open.
The five-mile trade area carries a median household income near $95,000 — comfortably into the band where dog ownership, daycare frequency, and boarding travel all strengthen.2 The submarket's dual-income commuter density is what carries the recurring daycare base, the predictability driver a lender prizes, while its affluence and travel propensity carry episodic boarding through the holiday and summer peaks. Because Oregon's urban growth boundary rations the commercial land a competing resort would need, the incumbent advantage of an early, well-sited integrated facility is durable rather than quickly competed away.15
Siting does the rest, and it is where pet-care deals most often die. The subject sits on a light-industrial-to-commercial pad with a conditional use permit already secured, residential setbacks satisfied, and municipal water and sewer sized for animal-waste drainage — the three conditions (zoning, soundproofing and setbacks, and drainage) that most frequently derail a kennel after a lease is signed.12 The specialized buildout — HVAC and ventilation, odor control, noise attenuation, durable non-porous flooring, and secure runs — is budgeted rather than assumed, and animal-bailee insurance beyond standard commercial general liability is treated as a condition precedent, because standard policies exclude animals in the operator's care, custody, or control.13
The SBA 7(a) structure.
Total project cost lands at $6.35 million. The 7(a) program can finance the buildout, equipment, and working capital an owner-operated pet-care business needs in a single loan, which is why an integrated facility routes here rather than to a fixed-asset-only 504.
| Cost component | Amount |
|---|---|
| Land (~2.0-acre pad) | $0.80M |
| Site work & utilities | $0.70M |
| Building shell (15,000 sf) | $2.55M |
| Specialized buildout (HVAC, odor & noise control, drainage, runs, flooring) | $0.95M |
| FF&E & equipment | $0.55M |
| Soft costs & contingency | $0.40M |
| Working capital & interest reserve | $0.40M |
| Total project cost | $6.35M |
| Item | Figure |
|---|---|
| SBA 7(a) loan (85%) | $5.40M |
| Borrower equity injection (15%) | $0.95M |
| Term / amortization | 10-year term / 25-year amortization |
| Illustrative rate | ~10.25% (Prime + 2.75%) |
| Annual debt service (amortizing) | ≈ $600k |
Structure per SBA 7(a) conventions under SOP 50 10 8; owner-occupancy 60% for new construction; DSCR convention ~1.15–1.25x. See sources 10 and 16.
The equity injection sits at 15 percent, not the baseline 10 percent SBA minimum, and that is deliberate: the 7(a) program can advance up to 90 percent, but SBA policy and lenders escalate the required injection for projects that are both special-purpose and, as a ground-up build, effectively a start-up.10 A $0.95 million injection against a $5.40 million loan is the conservative posture a purpose-built kennel with re-tenanting risk warrants. On a 25-year amortization at an illustrative 10.25 percent (Prime plus 2.75), fully amortizing annual debt service is about $600,000 — the number the projected coverage has to clear. Because a new pet-care facility takes 18 to 36 months to build daycare membership and boarding occupancy, the structure carries an interest-only bridge (about $554,000 a year) through the ramp, and the uses of funds fund a working-capital and interest reserve so the deal is sized to stabilized cash flow, not day-one revenue.3
Feasible and bankable, on coverage the credit can document.
The stabilized model builds revenue from three engines — recurring daycare, episodic boarding, and grooming — nets labor and operating expense at benchmark ratios, and carries the coverage to the SBA convention and beyond on a graded ramp.
| Line | Basis | Amount |
|---|---|---|
| Daycare revenue (recurring) | ~110 daily dogs × ~$40/dog-day × ~310 days3 | ≈ $1.36M |
| Boarding revenue (episodic) | 80 suites × ~43% annual occupancy × ~$68 ADR6 | ≈ $0.86M |
| Grooming & retail | Appointment grooming plus retail attach | ≈ $0.33M |
| Total revenue | Daycare + boarding + grooming/retail | ≈ $2.55M |
| Labor & benefits | ~37% of revenue; ~1 staff per 15 dogs5 | ≈ ($0.95M) |
| Other operating expense | Food & supplies, utilities, R&M, insurance, marketing, property tax, G&A | ≈ ($0.70M) |
| Net operating income (NOI) | Revenue less labor and operating expense | ≈ $0.90M |
Stabilized EBITDA margin near 35% sits inside the 25–40% mature range, and labor near 37% inside the 35–50% band, for an integrated facility with a recurring daycare base. See sources 3, 4, and 5.
| Year | Stage | NOI | Debt-service basis | DSCR |
|---|---|---|---|---|
| Year 1 | Ramp (interest-only bridge) | ~$580k | Interest-only ~$554k | 1.05 |
| Year 2 | Building | ~$780k | Full amortizing ~$600k | 1.30 |
| Year 3 | Stabilized | ~$900k | Full amortizing ~$600k | 1.50 |
DSCR computed as NOI divided by the period debt-service obligation. See source 10 for the ~1.15–1.25x coverage convention.
The stabilized 1.50x coverage is the figure the lender documents, and it clears the SBA's roughly 1.15–1.25x convention with real headroom.10 By Year 2 the project already covers fully amortizing debt service at 1.30x. The Year 1 figure of 1.05x is thin by design — it is the ramp year — which is exactly why the structure carries an interest-only bridge and a funded interest reserve through stabilization: the daycare membership base ramps first and fastest, boarding fills behind it, and permanent, fully amortizing coverage is measured once the facility reaches its supportable utilization. Modeling stabilized daycare membership and boarding occupancy on day one, or extrapolating the holiday-peak boarding month across twelve, is one of the most common ways these pro formas fail review; the ramp here is deliberately graded to the documented 18-to-36-month curve.34
On the equity side, the $0.95 million injection earns growing levered free cash flow — minimal in the interest-only ramp year, building as utilization climbs and net of a maintenance reserve for the specialized plant. The exit is valued on a going-concern basis, not a leased-fee cap rate: a pet-care facility is an owner-operated business whose Market Value of the Going Concern combines the real property, FF&E, and the recurring-daycare-driven goodwill.9 Capitalizing a Year-10 stabilized NOI near $1.06 million on a deliberately conservative going-concern basis — reflecting the specialized-collateral, going-dark, and owner-dependence discount the category carries, and consistent with the roughly 4.4x average earnings multiple the segment traded at in 2025 — implies a going-concern value near $6.4 million, and roughly $1.5 million of net equity after selling costs and the outstanding SBA balance of about $4.7 million.78 Blended with the ramped distributions, the result is an illustrative levered equity IRR of about 21 percent over a 10-year hold.
Verdict: financially feasible and bankable. On independently derived demand, a stabilized 1.50x DSCR, and a ~21% levered equity IRR, the projections support the SBA 7(a) credit.
Independent demand, ramp, competition, and DSCR stress.
The engagement was scoped the way a credit committee reads it. As an independent feasibility consultant, our role is to test the sponsor's projection against the market, not to restate it — the value of the deliverable is precisely that it carries no stake in the outcome. We built the two revenue lines separately: recurring daycare on a membership-and-package base that ramps first, and episodic boarding on seasonal occupancy that models the January–February trough rather than extrapolating the holiday peak. Labor was held at benchmark ratios — roughly 37 percent of revenue against a one-staff-per-15-dogs guideline — because understated staffing is the fastest way a pet-care pro forma breaks in review.5
The coverage analysis was then stress-tested. We ran the debt-service coverage against occupancy and labor downside — the two variables a pet-care facility is most exposed to — to confirm the credit still holds when the ramp runs slow or wages inflate. Two scope boundaries are worth stating plainly: as the feasibility consultant, we reference, but do not perform, the Phase I environmental site assessment, which is a separate environmental professional's engagement; and we treat the conditional use permit and animal-bailee insurance as hard gates and conditions precedent rather than assumptions.1213 That combination — independent demand, a graded ramp, competition, and a stressed DSCR — is what lets the lender rely on the file.
Representative engagement
This is an anonymized, illustrative worked example of our methodology, built on market data current to 2026; figures are representative of a typical engagement of this type and do not depict a specific client, site, or completed transaction.
Underwriting an Oregon pet boarding or doggy daycare facility for an SBA loan? Start with the feasibility study.
Feasibility Study Company prepares independent pet boarding, doggy daycare, and grooming feasibility studies for SBA 7(a) and 504 credits, built to the coverage standard your lender must document. A methodology briefing walks through the demand, ramp, competition, and DSCR analysis behind a case like this one, calibrated to your submarket and facility program.
Request a methodology briefingData sources and dates.
The deal figures are illustrative of the engagement type; the market data that grounds each dimension is real and sourced, drawn from our standing Oregon, Pet Boarding & Daycare, and SBA 7(a) & 504 analyses and the primary authorities they cite.
- IBISWorld, “Pet Grooming & Boarding in the US” (NAICS 81291), published January 2026: $15.5 billion in 2025 (up 2.5% YoY), 9.4% CAGR 2020–2025, and 169,481 businesses concentrated in California, Texas, and Florida; the segment is overwhelmingly independent, with public and franchised operators at 5% or less of the daycare-and-boarding market.
- American Pet Products Association (APPA), 2026 State of the Industry Report (released March 26, 2026): 71% of U.S. households own a pet and 53% own a dog; total U.S. pet spending $158 billion in 2025, projected $165 billion for 2026; Forbes Advisor analysis of APPA data on ownership skew by income ($100K+ households), tenure (homeowners), and geography (suburban ~71%); pet care is discretionary and more recession-sensitive than medical veterinary care.
- Wagbar franchise operating data (2026): revenue mix roughly 50–65% daycare, 25–40% boarding, and 10–20% grooming; daycare $25–$40 per dog-day; capacity ramp of 40–50% by month 12, 60–70% by 24, and 70–85% by 30–36 months; mature EBITDA 25–40%.
- BusinessDojo, pet daycare operating benchmarks (2026): daycare gross margins 40–60% and net margins 10–25%; break-even commonly 18–24 months as monthly revenue covers fixed overhead.
- Pet Care Services Association staffing guideline (~1 staff member per 15 dogs); MoeGo labor benchmark of 35–50% of revenue; Kennel Connection (2025) on facilities running 50–70% labor cost and the documented January–February boarding attendance trough.
- Pet-care pricing benchmarks (Pet Boarding & Daycare Magazine and industry operating data): boarding roughly $35–$85 per night for standard suites and $75–$150 or more for luxury resorts; recurring daycare $25–$40 per dog-day; integrated facilities cross-sell to smooth boarding seasonality.
- BizBuySell, 2025 Insight data (dog daycare & boarding): average earnings multiple 4.40 (five-year average 3.18), revenue multiple 1.15, median sale price $850,000 (up 125% over five years); 2025 median business roughly $569,000 in revenue at ~34% owner-earnings margins.
- Valuation-multiple context: Peak Business Valuation, average 2.77x–3.32x SDE for pet-care businesses; OffDeal, diversified operators with a recurring daycare base reaching ~5x–6x SDE versus ~3x–4x for owner-dependent operations; PetVetSales and broker sources citing 3x–6x EBITDA for larger scaled operators; DealStream, capacity-based rules of thumb of $2,000–$6,000 per kennel-run that ignore revenue productivity.
- Going-concern / business-enterprise appraisal practice (Appraisal Institute; USPAP Standards): the Market Value of the Going Concern is allocated among real property, FF&E and equipment, and intangible/goodwill value, with the specialized-real-estate and going-dark risk explicit; going-concern value can exceed underlying real-estate value, so lenders weight collateral toward real estate and FF&E rather than goodwill.
- U.S. Small Business Administration SOP 50 10 8 (effective June 1, 2025) and 13 CFR 120.160(b): a feasibility study is discretionary but expected for special-purpose properties and ground-up projects; owner-occupancy of 51% (existing) or 60% (new construction); 10% minimum equity injection, escalated for special-purpose and start-up projects; stabilized DSCR convention of roughly 1.15–1.25x; Franchise Directory reinstated (Franchisor Certification deadline July 31, 2025).
- USDA Rural Development, Business & Industry (B&I) guaranteed loan program under the OneRD Guarantee Loan Initiative: rural eligibility (population under 50,000), FY2025 guarantee fee 3%, with no credit-elsewhere test; routes through the USDA Rural Development Oregon State Office in Portland.
- Local zoning and siting authorities: conditional-use-permit requirements and residential setbacks commonly 100–500 feet (reducible where soundproofed), plus wastewater and drainage compliance for animal waste; Oregon's urban growth boundary land-use system further rations developable commercial land.
- Commercial insurance sources (Insureon; Pet Care Insurance; ISO form CG 00 01 exclusion j(4)): standard commercial general liability excludes animals in the operator's care, custody, or control, so animal-bailee / care-custody-control coverage is required, with bailee sub-limits commonly ~$2,500–$25,000 per year and up to $3 million for large operations.
- U.S. Census Bureau, Vintage 2025 Population Estimates (Oregon about 4.27 million as of July 1, 2025; growth near 0.33% and now migration-driven; 13 of 36 counties lost population); Portland State University Population Research Center (2025).
- Oregon Department of Administrative Services, Office of Economic Analysis, maximum annual residential rent increase for 2026 set at 9.5% (September 30, 2025); SB 608 (2019) and SB 611 (2023); buildings under 15 years old exempt; Oregon urban growth boundary land-use system.
- U.S. Small Business Administration Portland District Office (30 Oregon counties plus four in southwestern Washington); Evergreen Business Capital (dominant Pacific Northwest 504 CDC); active Oregon 7(a) lenders Umpqua-Columbia, U.S. Bank, KeyBank, and Summit Bank; SBA Policy Notice combined 7(a)-plus-504 cap of $10 million effective July 4, 2026; OPB/KLCC coverage of Intel's Oregon headcount falling from a ~23,000 peak toward ~18,000 (Silicon Forest concentration).