Practice Areas
Feasibility studies, by financing program.
The program that finances a project determines what a defensible study must contain. The practice prepares feasibility and market studies across the four channels that fund commercial real estate: SBA, USDA, EB-5, and conventional and agency lending. Each is built to the standard that will review it.
One method, four programs.
A feasibility study answers whether a project will generate the demand and cash flow to succeed and to service its debt. What changes from program to program is not the analysis but the framing: the eligibility test, the required components, and the reviewing authority. The practice builds each study to the program that will judge it.
SBA and USDA impose their requirements by regulation, and a study is keyed to eligibility as much as to viability. EB-5 requires a defensible job-creation methodology that USCIS will accept. Conventional and agency lenders operate differently again: no rule mandates a study, so they require a market study when the deal carries risk an underwriter cannot resolve from the rent roll alone. The four sections below set out when each program calls for a study, and each opens into a dedicated practice page. The analytical framework that underlies all four is the same.
When each program calls for a study.
The four financing channels, the borrowers they serve, the event that triggers a study, and the standard the deliverable is built to.
Does an SBA loan require a feasibility study?
Not automatically. Under 13 CFR 120.160(b), SBA may require a feasibility study, and one is expected in practice for special-purpose properties and for startup or ground-up projects that have no operating history to underwrite. On a straightforward acquisition of an established business in standard-use real estate, a study is often not required.
When does USDA require a feasibility study?
USDA requires a feasibility study, prepared by an independent qualified consultant, for guaranteed loans greater than one million dollars to a new entity or a new business, under 7 CFR Part 5001. The study must address the five components named in the regulation: economic, market, technical, financial, and management feasibility.
How many jobs does EB-5 require?
Each EB-5 investor must create at least ten full-time jobs, where full-time means a position requiring a minimum of 35 working hours per week. A regional-center investment may satisfy up to 90 percent of that requirement with indirect jobs quantified through an input-output economic model; a direct investment must create the positions directly.
| Program | Who it serves | When a study is needed | Governing standard |
|---|---|---|---|
| SBA 7(a) & 504 | Small businesses acquiring or building owner-occupied property | Special-purpose property; startup or ground-up projects | SBA SOP 50 10 8 |
| USDA Rural Development | Rural businesses and community facilities | Guaranteed loans over $1M to a new entity or new business | 7 CFR Part 5001 |
| EB-5 | Immigrant investor projects creating jobs | To document required job creation for the petition | USCIS Policy Manual; RIA 2022 |
| Conventional & Institutional | Agency, HUD-FHA, life-company, CMBS, bank borrowers | Construction, lease-up, repositioning, or story assets | NCHMA; HUD MAP Guide |
Where each applies.
SBA 7(a) and 504
The SBA programs finance owner-occupied commercial real estate for small businesses, with 7(a) covering a broad range of uses and 504 structured for fixed-asset acquisition and construction. SBA does not mandate a feasibility study on every deal; under 13 CFR 120.160(b) the agency may require one, and in practice a study is expected for special-purpose properties, whose design restricts them to a single use, and for startup or ground-up projects with no operating history to underwrite. Owner-occupancy thresholds apply: 51 percent of the space for existing buildings and 60 percent for new construction.
SBA feasibility studies →USDA Rural Development
USDA's OneRD guaranteed programs, Business and Industry, Community Facilities, and the Rural Energy for America Program, finance projects in eligible rural areas. The regulation requires a feasibility study for guaranteed loans over one million dollars to a new entity or new business, and defines the study around five components: economic, market, technical, financial, and management feasibility. Rural population tests and program-specific eligibility govern which projects qualify.
USDA feasibility studies →EB-5
The EB-5 immigrant investor program requires that a project create a threshold number of jobs per investor, and the petition must document that job creation with an economic impact analysis. The analysis relies on accepted input-output methodologies and must rest on economically and statistically valid and transparent forecasting tools. Minimum investment is set by the Reform and Integrity Act of 2022, with a lower threshold in targeted employment areas.
EB-5 economic analysis →Conventional and Institutional
Conventional and agency lending, through Fannie Mae and Freddie Mac, HUD-FHA, life companies, CMBS conduits, and bank construction lenders, finances the largest share of commercial real estate. No regulation mandates a feasibility study here; instead, lenders require a market study when the deal carries risk the rent roll cannot resolve: construction, lease-up, repositioning, or a story asset. The loan is sized by coverage, so the study's conclusions drive the credit.
Conventional market studies →Matching the project to the program.
A single project can sometimes route more than one way. The program follows the borrower, the property, and the capital source.
- Owner-occupied business acquiring or building its own premisesSBA 7(a) or 504, subject to the 51 percent or 60 percent occupancy test.
- Business or community facility in an eligible rural areaUSDA Rural Development (B&I, Community Facilities, or REAP).
- Project raising capital from immigrant investorsEB-5, with an economic impact analysis documenting job creation.
- Investment property financed by an agency, bank, or institutionConventional or institutional, with a market study scoped to the capital source.
- Rural affordable multifamilyUSDA Section 538, often layered with conventional or agency structures.
Feasibility study, market study, business plan, appraisal.
Four documents are routinely confused, and a lender that asks for one will not accept another in its place. Each answers a different question and is prepared to a different standard.
A feasibility study asks whether a project will work and service its debt. A market study analyzes demand and supply to inform underwriting. A business plan is the sponsor's own strategy document. An appraisal is an independent opinion of value. They are not interchangeable, and only the first two are the practice's work.
| Instrument | Question it answers | Prepared by | Standard |
|---|---|---|---|
| Feasibility study | Will the project succeed and service its debt? | Independent third-party analyst | SBA SOP; USDA 7 CFR 5001 |
| Market study | What is the demand, supply, and achievable rent? | Independent third-party analyst | NCHMA; HUD MAP |
| Business plan | What is the sponsor's strategy and projection? | The borrower or sponsor | No external standard |
| Appraisal | What is the property worth? | Licensed appraiser | USPAP |
The distinctions matter in review. A feasibility study is not an appraisal, and it is not an appraisal review under USPAP Standards 3 and 4; it reaches a viability conclusion, not an opinion of value. A business plan, however detailed, is the sponsor's own document and carries the sponsor's interest, which is why an SBA or USDA credit calls for an independent study rather than the plan alone. Where a program calls for more than one instrument, the practice scopes each to the authority that will review it. The analytical framework sets out how the feasibility and market analysis is built.
The program terms, defined.
The vocabulary that recurs across the four financing programs, stated precisely.
- SOP 50 10 8
- The SBA Standard Operating Procedure governing 7(a) and 504 lending, effective June 1, 2025, which sets out when a feasibility study and a special-purpose going-concern appraisal are expected.
- Special-purpose property
- A property whose design limits it to a single use, such as a hotel, car wash, or gas station. SBA identifies these as carrying heightened underwriting scrutiny and a feasibility expectation.
- Owner-occupancy (51 / 60)
- The SBA requirement that the borrowing business occupy at least 51 percent of an existing building, or 60 percent of new construction, for the property to be eligible.
- 7 CFR Part 5001
- The USDA OneRD regulation defining a feasibility study around five components, economic, market, technical, financial, and management, and requiring one for guaranteed loans over one million dollars to a new entity.
- Section 538
- The USDA Guaranteed Rural Rental Housing program: rents restricted at or below 115 percent of area median income, terms up to 40 years, guarantees up to 90 percent, in rural areas of 35,000 or fewer population.
- EB-5 job creation
- The requirement that each EB-5 investor create at least ten full-time jobs, with full-time defined as a position requiring a minimum of 35 working hours per week.
- Targeted Employment Area (TEA)
- A rural area or an area of high unemployment in which the reduced EB-5 investment threshold applies, set by the Reform and Integrity Act of 2022.
- Market study
- The demand and supply analysis conventional and agency lenders require, as distinct from a feasibility study that reaches an independent viability opinion. Governed for multifamily by NCHMA Model Content Standards.
Practice-area questions.
Which financing programs require a feasibility study?
SBA expects a feasibility study for special-purpose properties and startup or ground-up projects under SOP 50 10 8. USDA requires one for guaranteed loans over one million dollars to a new entity or new business under 7 CFR Part 5001. EB-5 requires an economic impact analysis to document job creation. Conventional and agency lenders require a market study when the deal carries risk the underwriter cannot resolve from the rent roll alone, such as construction or lease-up.
How does the feasibility study differ by program?
The program determines the deliverable and the standard it is built to. SBA and USDA studies follow their respective SOP and regulation and are keyed to eligibility. EB-5 requires a job-creation methodology accepted by USCIS. Conventional and agency lending follows NCHMA Model Content Standards and, for FHA, the HUD MAP form set, and typically calls the deliverable a market study rather than a feasibility study. The underlying analytical work overlaps, but the framing and required components differ.
Can one study satisfy more than one program?
The core analysis of demand, supply, absorption, and financial performance is common across programs, but the deliverable must be structured to the specific reviewer. A study built for an SBA credit is not automatically formatted for a HUD MAP submission or an EB-5 filing. The practice scopes each engagement to the program that will review it so the deliverable meets that authority's requirements without rework.
Is a feasibility study the same as a business plan?
No. A business plan is the sponsor's own strategy and projection document, and it carries the sponsor's interest in the outcome. A feasibility study is prepared by an independent third party and reaches a conclusion the sponsor does not control. This is why SBA and USDA credits call for an independent study rather than relying on the business plan alone, and why the two are not interchangeable in review.
Not sure which program fits?
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