Prepared by Michal Mohelsky, J.D., Practicing Affiliate of the Appraisal Institute, FMVA

MMCG Invest, LLC · San Francisco, CA

Published May 18, 2026 · Last updated May 21, 2026

The MMCG Feasibility Study Glossary

Lender-Grade Terminology for Feasibility, Market Analysis, and SBA/USDA Underwriting

Feasibility work sits at the intersection of market analysis, credit underwriting, federal loan program regulation, and appraisal standards. Each of these disciplines carries its own vocabulary, and imprecision in any of them creates friction in the credit file. This glossary defines the terms that govern lender-grade feasibility practice as MMCG applies them: the analytical concepts behind demand modeling, the ratios that drive credit decisions, the program mechanics of SBA 7(a), SBA 504, and USDA guaranteed lending, the performance metrics specific to each asset class, and the professional standards that separate an independent third-party study from advocacy.

Entries are organized by discipline rather than alphabetically, because that is how the material is actually used. Each definition is followed by a note on how the concept functions within an MMCG feasibility study, so that lenders, borrowers, and reviewers can see not only what a term means but where it appears in the deliverable. Program-specific figures reflect the regulations, Standard Operating Procedures, and annual notices in effect as of mid-2026; where a figure resets each fiscal year, the entry describes the governing mechanism rather than a number that will expire.

1. Standards and Deliverable Architecture

The terms in this section define what a feasibility study is, which professional standards shape it, and what lenders and government reviewers expect to find in a credible third-party report.

Feasibility Study vs. Market Study vs. Appraisal

Three distinct deliverables are routinely confused in commercial lending. A market study analyzes the supply, demand, and pricing conditions of a defined market without reaching a conclusion about any specific project. A feasibility study goes further: it tests whether a specific proposed project, at a specific site, with a specific budget and capital structure, is economically viable, combining market analysis with financial projections and concluding with an explicit feasibility determination. An appraisal is different in kind: it develops an opinion of value under recognized valuation standards. In classical terms, a project is economically feasible when its expected value or income stream exceeds the total cost of bringing it into production. Lenders order appraisals to establish collateral value and feasibility studies to establish whether the business plan behind the loan can actually perform.

In an MMCG feasibility study: the deliverable spans the full sequence, from market delineation through demand modeling, competitive analysis, financial projections, and stress testing, ending in a documented feasibility conclusion; it complements the appraisal in the credit file rather than duplicating it.

Uniform Standards of Professional Appraisal Practice (USPAP)

USPAP is the set of professional standards for appraisal practice in the United States, developed and maintained by the Appraisal Standards Board of The Appraisal Foundation and required for appraisals in federally related transactions. Its current edition (the 2024 edition, which ended the previous fixed two-year revision cycle) governs ethics, competency, scope of work, and reporting for appraisers. A feasibility study is not an appraisal and does not produce an opinion of value, but the discipline USPAP imposes, including impartiality, documented scope of work, disclosure of assumptions, and certification of independence, defines what credible analytical work looks like. A study described as USPAP-aligned adopts those disciplines without claiming to be an appraisal performed under USPAP's valuation standards.

In an MMCG feasibility study: reports are prepared in alignment with USPAP's ethics and scope-of-work disciplines, reflecting the firm's Practicing Affiliate standing with the Appraisal Institute, while remaining clearly distinct from appraisal deliverables.

FIRREA (Financial Institutions Reform, Recovery, and Enforcement Act of 1989)

FIRREA is the federal statute that, through Title XI, created the modern appraisal regulatory framework for federally regulated lenders. It established state appraiser licensing, mandated appraisals for federally related transactions above de minimis thresholds (currently $500,000 for commercial real estate transactions and $400,000 for residential), and embedded the principle of appraiser independence in bank regulation. Its practical legacy for feasibility work is indirect but significant: FIRREA trained bank credit culture to expect independent, standards-based third-party analysis, and the interagency guidelines that implement it shape how credit departments review any external report, including feasibility studies that accompany appraisals in construction and special-purpose lending.

In an MMCG feasibility study: the independence, documentation, and review expectations that FIRREA institutionalized are treated as the baseline for how the report is sourced, cited, and certified.

Related: Methodology overview.

Highest and Best Use (HBU)

Highest and best use is the appraisal concept identifying the reasonably probable use of a property that is legally permissible, physically possible, financially feasible, and maximally productive. The four tests are applied in that order, both for the site as though vacant and for the property as improved. Financial feasibility, the third test, is where feasibility analysis and valuation practice intersect: a use is financially feasible when it generates income sufficient to justify the cost of creating and operating it. A feasibility study is, in effect, a deep and project-specific execution of that third test, performed for one proposed use rather than across all candidate uses.

In an MMCG feasibility study: the proposed project is tested against the same economic logic an appraiser applies in the HBU analysis, giving the lender consistency between the appraisal and the feasibility conclusion in the credit file.

Related: Feasibility Study vs. Market Study vs. Appraisal (this glossary).

Going Concern / Going-Concern Value

Going-concern value is the total value of an operating business as an assembled, income-producing whole: the real property, the furniture, fixtures, and equipment, and the intangible value of the business operation itself (workforce in place, customer relationships, licenses, brand). Operating real estate assets such as hotels, car washes, senior housing communities, gas stations, and self-storage facilities are bought, financed, and underwritten as going concerns, which is why SBA lending on these properties concerns itself with business performance rather than passive real estate value. The allocation of value among real property, FF&E, and intangibles is an appraisal problem; the question of whether the operation will generate the projected cash flow is a feasibility problem.

In an MMCG feasibility study: operating assets are modeled as businesses, with revenue built from operational drivers (throughput, occupancy, census, membership, fuel volume) rather than from rent comparables alone.

Related: Asset-class landing pages (hotel, car wash, assisted living, gas station, self-storage).

As-Is, As-Complete, and As-Stabilized Value

Construction and development lending works with three value scenarios. As-is value reflects the property in its current condition on the effective date. As-complete value (also called prospective value upon completion) reflects the hypothetical condition of finished construction as of a future date. As-stabilized value reflects the property once it has reached stabilized occupancy and operating performance, also as of a future date. The second and third are prospective values resting on extraordinary assumptions about completion and lease-up. Feasibility projections and the as-stabilized scenario are two views of the same question: the study's demand analysis and absorption schedule are what make the appraiser's stabilization assumptions defensible.

In an MMCG feasibility study: the projection model defines the path to stabilization, including the absorption or ramp-up schedule and the stabilized operating profile, which lenders reconcile against the appraisal's as-stabilized premise.

Related: Stabilization; Absorption (this glossary).

Extraordinary Assumption vs. Hypothetical Condition

USPAP distinguishes two devices for handling uncertainty. An extraordinary assumption is an assignment-specific assumption that is presumed true but uncertain; if it proved false, the conclusions could change (for example, assuming a proposed project receives its zoning approval). A hypothetical condition is a condition known to be contrary to fact as of the effective date, used deliberately for analysis (for example, valuing a building as complete when it is not yet built). The distinction matters because it tells the reader exactly how much weight the conclusion can bear and what must occur for it to hold. Prospective values and feasibility projections necessarily rest on such disclosed assumptions.

In an MMCG feasibility study: material assumptions (entitlements, budget, financing terms, opening date) are disclosed explicitly, so the lender can see what the feasibility conclusion is conditioned on and monitor those conditions through closing.

Related: Certification and Limiting Conditions (this glossary).

Independence and Objectivity Requirements

Both SBA and USDA lending require that feasibility studies be prepared by qualified consultants who are independent of the transaction: no ownership interest in the project, no compensation contingent on loan approval or on reaching a favorable conclusion, and no advocacy role for borrower or lender. The current SBA SOP and the USDA OneRD regulation each carry this expectation in their feasibility study provisions, and it mirrors the appraiser independence rules that govern valuation. Independence is not a formality; it is the entire basis on which a lender can rely on a third-party study, and it is what distinguishes analysis from a marketing document.

In an MMCG feasibility study: independence is certified in every report, fees are never contingent on conclusions or loan outcomes, and the firm maintains structural guardrails against dual roles on the same transaction, such as serving as both feasibility provider and credit memo preparer.

Related: About MMCG.

Third-Party Report Standards / Report Review

A report is lender-grade when a credit department, an SBA reviewer, or a USDA state office can rely on it without reconstructing the work. In practice that means a disclosed scope of work, transparent methodology, identified and current data sources, reconciliation of conflicting evidence, projections tied to documented market inputs, and a certification page establishing independence and qualifications. Report review is the credit-side counterpart: banks and agencies review third-party studies for completeness, internal consistency, and compliance with program requirements before the file advances. Reports that fail review cost the transaction time, which is why the review standard, not the page count, is the correct measure of quality.

In an MMCG feasibility study: every report is structured for the reviewer's checklist, with sourcing, methodology, and certifications positioned where credit departments and agency reviewers expect to find them.

Related: Sample Reports.

Scope of Work

Scope of work is the discipline, formalized in USPAP and equally applicable to feasibility practice, of defining the research and analysis necessary to produce credible results for the intended use and intended users, and then disclosing what was and was not done. Scope is set by the problem, not the budget: a startup express car wash on a greenfield site demands different depth than a refinance of a stabilized asset. Clear scope definition governs the engagement letter, prevents mismatched expectations between borrower, lender, and consultant, and gives the reviewer a basis for judging whether the analysis is sufficient for the credit decision it supports.

In an MMCG feasibility study: scope is defined at engagement against the loan program's requirements and the lender's stated needs, and the report discloses that scope so the reviewer can confirm sufficiency.

Related: Engagement Process page.

Certification and Statement of Assumptions and Limiting Conditions

The certification page is where the analyst personally attests to the conditions that make the report reliable: that the analysis and conclusions are the analyst's own, that the analyst has no present or prospective interest in the project, that compensation is not contingent on conclusions or loan approval, and that the work was prepared competently and in conformity with the disclosed scope. The statement of assumptions and limiting conditions defines the boundaries of the work: reliance on information provided, the treatment of legal and environmental matters outside the analyst's discipline, and the intended use and users of the report. Reviewers look for these pages first, because they establish whether the report can carry weight in the file at all.

In an MMCG feasibility study: every report carries a signed certification and a complete statement of assumptions and limiting conditions, executed by the named author of record.

Related: Sample Reports.

Acceptance Guarantee

An acceptance guarantee is the market convention under which a feasibility provider commits to revise its study until the lender and the relevant agency accept it as compliant with program requirements. Properly framed, the guarantee attaches to form and compliance: completeness, required content, formatting, and responsiveness to reviewer comments. It does not, and cannot credibly, promise loan approval, and it never extends to the study's conclusions, because a guarantee of favorable findings would destroy the independence on which the entire deliverable rests. A provider offering to guarantee outcomes rather than acceptance is advertising a conflict of interest.

In an MMCG feasibility study: MMCG contractually guarantees lender and agency acceptance of the report's compliance with program requirements, while conclusions remain exclusively evidence-driven.

2. Market and Trade Area Analysis

The terms in this section govern how a market is delineated, how demand is quantified, and how a proposed project's share of that demand is defended.

Primary Market Area (PMA) and Secondary Market Area (SMA)

The primary market area is the geography from which a project will draw the substantial majority of its demand, conventionally 70 to 80 percent of customers, patients, residents, or members depending on the asset class. The secondary market area is the wider geography contributing the remaining, more diffuse demand. A PMA is not a radius; it is a boundary defended by evidence: drive times, physical and psychological barriers, competitive positioning, and observed customer origin patterns. Because every downstream calculation (demand pools, capture rates, saturation) inherits the PMA boundary, an indefensible PMA quietly invalidates the entire demand analysis, which is why reviewers test it first.

In an MMCG feasibility study: the PMA is delineated from drive-time isochrones calibrated against observed customer movement data, including Placer.ai true trade areas of competing facilities, rather than from arbitrary radius rings.

Trade Area Delineation

Trade area delineation is the set of methods for drawing the boundary within which a location competes for customers. The traditional toolkit includes radius (ring) analysis, the crudest method; drive-time analysis, which respects road networks; customer spotting, which maps actual customer origins; the analog method, which borrows the observed trade area of a comparable facility; and probabilistic gravity modeling. Modern mobility data has shifted the standard: observed device movement now allows trade areas to be measured rather than merely estimated, exposing how often radius-based delineations misstate the true geography of demand, particularly in markets shaped by commuter flows, barriers, or asymmetric competition.

In an MMCG feasibility study: delineation begins with network-based drive times, is validated against Placer.ai observed trade areas for competitors and analogs, and is documented so the reviewer can see why the boundary sits where it does.

Gravity Models and the Huff Model

Gravity models formalize an old retail intuition: customers are attracted to destinations in proportion to their attractiveness and in inverse proportion to the friction of reaching them. Reilly's Law of Retail Gravitation (1931) applied this to competing cities; the Huff model (1963) made it probabilistic and site-specific, expressing the probability that a consumer at a given origin patronizes a given destination as that destination's attractiveness (size, offer, quality) discounted by travel time, divided by the same quantity summed across all competing destinations. The output is a probability surface: expected capture by neighborhood rather than a single boundary line. Gravity models remain the analytical backbone of share estimation where observed data is thin, and a calibration target where it is rich.

In an MMCG feasibility study: Huff-type share modeling is used to allocate demand among competitors and the subject, calibrated where possible against observed visit shares from mobility data.

Drive-Time (Isochrone) Analysis

Drive-time analysis defines a market as the area reachable within a stated travel time over the actual road network, producing isochrones (equal-travel-time boundaries) such as 5, 10, and 15 minutes. It corrects the central defect of radius analysis, which treats a river crossing, a highway interchange, and open farmland as equivalent. Appropriate drive-time bands are asset-class conventions grounded in customer behavior: convenience-driven uses (express car wash, c-store, QSR) draw from short bands, while destination uses (senior housing, hospitals, resorts) draw from long ones. Isochrones are the standard geometry for demographic aggregation in lender-grade market analysis.

In an MMCG feasibility study: demographics, demand pools, and competitive supply are aggregated over drive-time isochrones matched to the asset class's observed customer behavior, with band selection justified in the report.

Capture Rate

Capture rate is the share of a defined demand pool that a specific project must attract to achieve its projected performance: qualified households, procedures, room nights, or wash volumes captured by the subject, divided by the total pool in the market area. It is the single most scrutinized number in a feasibility study because it converts market analysis into revenue. A capture rate is defensible only relative to evidence: the subject's competitive positioning, the observed performance of analogs, and the arithmetic of what competitors would have to lose. Reviewers reject studies whose conclusions require capture rates without precedent in the market.

In an MMCG feasibility study: required capture is derived from the revenue model, then tested against analog performance, competitor volumes observed in mobility data, and the demand pool's depth, with the margin between required and plausible capture stated explicitly.

Penetration Rate

Penetration rate measures how deeply a product or service has spread through its eligible base: members, subscribers, or users as a percentage of the qualified population. It is a market-level and product-level metric, distinct from capture rate, which is project-level. The two are routinely conflated, and the distinction matters: penetration describes how large the pie is or can become (for example, the share of age- and income-qualified seniors using assisted living, or the share of car wash customers on unlimited plans), while capture describes the slice a specific project takes. Feasibility errors often trace to using an aggressive penetration assumption where a capture analysis was required, or vice versa.

In an MMCG feasibility study: penetration benchmarks size the demand pool (for example, membership conversion in express car wash or unit demand per qualified senior household), and capture analysis then allocates that pool to the subject.

Market Saturation

Market saturation describes the condition in which existing supply meets or exceeds the demand a market can support, leaving new entrants to grow primarily by taking share. Classical retail analysis formalized this in the Index of Retail Saturation, which divides area demand (population times per-capita expenditure for the category) by existing supply (square footage or capacity), producing a demand-per-unit-of-supply figure comparable across markets. Saturation is asset-class specific and threshold conventions vary; what matters analytically is the trajectory: pipeline supply against demographic demand growth. A market can be unsaturated today and oversupplied at the subject's opening.

In an MMCG feasibility study: saturation is measured as capacity per qualified demand unit (for example, tunnels per 10,000 households, beds per 1,000 age-qualified seniors), benchmarked against comparable markets, and projected forward through the construction pipeline to the subject's stabilization date.

Absorption and Absorption Rate

Absorption is the pace at which a market or a project takes up new space or capacity: units leased, beds filled, lots sold, or square feet occupied per period. Net absorption (change in occupied stock) describes the market; project absorption describes the subject's lease-up or sell-out schedule from opening to stabilization. The absorption assumption is where feasibility studies most often embed silent optimism, because every month of projected lease-up carries interest, operating deficits, and reserve draws. Defensible absorption is anchored to the observed lease-up of recent comparable projects in the same market, adjusted for the subject's positioning and the competitive pipeline arriving during its ramp.

In an MMCG feasibility study: the absorption schedule is built from documented comparable lease-ups, reconciled with market net absorption, and carried directly into the financial model, where it drives the interest carry and the stabilization date the lender underwrites to.

Demand Analysis

Demand analysis is the quantification of the need a proposed project addresses: how many qualified customers, households, patients, guests, or users exist in the market area, what they spend or consume, and how that translates into supportable capacity. Rigorous demand analysis is bottom-up and use-specific: demographic demand (age- and income-qualified populations for senior housing), expenditure demand (category spending for retail and services), or activity demand (traffic counts and trip purposes for fuel and convenience). Its counterpart is supply analysis; feasibility lives in the reconciliation of the two. A demand number without a documented derivation is an assertion, not an analysis.

In an MMCG feasibility study: demand is modeled from primary demographic and expenditure data, cross-checked against observed behavior (visitation, traffic, utilization), and reconciled against existing and pipeline supply to produce a supportable-capacity conclusion.

Void Analysis (Gap / Leakage-Surplus Analysis)

Void analysis identifies unmet demand in a market by comparing what residents spend in a category with what businesses in the area actually sell. Where demand exceeds local sales, spending is leaking to other markets, indicating a retail gap or void a new entrant might close; where sales exceed local demand, the area is importing customers and runs a surplus. Leakage-surplus analysis is a screening tool, not proof of feasibility: a gap may persist for good reasons (site economics, access, land costs), and a surplus market may still support a differentiated entrant. Its value is directional, pointing the deeper capture analysis at the right question.

In an MMCG feasibility study: leakage-surplus screening frames the opportunity, and the conclusion is then earned through capture analysis and competitor-level evidence rather than resting on the gap figure alone.

Demographic and Psychographic Segmentation

Demographic segmentation divides a market by measurable attributes: age, income, household composition, tenure, education, daytime versus residential population. Psychographic segmentation classifies households by lifestyle, values, and consumption behavior, operationalized in commercial systems such as Esri Tapestry Segmentation and Claritas PRIZM Premier, which assign neighborhoods to named lifestyle segments with documented spending propensities. Segmentation matters in feasibility because demand is rarely proportional to raw population: an express car wash, a boutique fitness concept, and a memory care community each draw from specific segments. Mobility data has added a behavioral layer, profiling the observed customer base of existing facilities rather than inferring it.

In an MMCG feasibility study: the demand pool is qualified by the segments that actually consume the use, and competitor customer profiles observed through Placer.ai are used to validate that the subject's market area contains the customers the concept requires.

3. Underwriting and Financial Metrics

The terms in this section are the arithmetic of the credit decision: the income cascade, the ratios lenders size loans with, and the analytical frameworks that test whether projections survive stress.

Net Operating Income (NOI) and Effective Gross Income (EGI)

The income statement of a property follows a fixed cascade. Potential gross income (PGI) is revenue at full occupancy and market rates. Deducting vacancy and collection loss yields effective gross income (EGI), the revenue realistically collected. Deducting operating expenses (taxes, insurance, utilities, management, repairs, reserves where the lender requires them) yields net operating income (NOI). NOI excludes debt service, income taxes, depreciation, and capital expenditures, which is precisely what makes it comparable across properties and capital structures. Nearly every underwriting ratio (cap rate, DSCR, debt yield, break-even occupancy) consumes NOI or one of its components, so an error in the cascade propagates through the entire credit analysis.

In an MMCG feasibility study: the projection model builds the full cascade from operational drivers upward, with each line benchmarked against market data and comparable operating statements, so the NOI the lender underwrites has a documented derivation.

Related: Sample Reports.

Vacancy and Collection Loss

Vacancy and collection loss is the underwriting deduction from potential gross income for space that stands empty, revenue lost during tenant turnover, and billed amounts never collected. Underwriting distinguishes actual vacancy (the property's current experience), market vacancy (the competitive set's experience), and stabilized vacancy (the long-run assumption appropriate for the asset once lease-up is complete). Lenders typically underwrite to the higher of actual or a market-supported stabilized figure, resisting the temptation to capitalize a temporarily full building. For operating businesses, the analog is utilization below capacity, and the same discipline applies: the stabilized assumption must be defended from market evidence, not asserted.

In an MMCG feasibility study: stabilized vacancy or utilization is derived from the competitive set's observed performance and the market's supply-demand balance at the subject's stabilization date, not from the sponsor's pro forma.

Capitalization Rate (Cap Rate)

The capitalization rate is the ratio of a property's net operating income to its value or price, and direct capitalization (NOI divided by cap rate) is the fastest bridge between income and value. Going-in cap rates price current income at acquisition; terminal (exit) cap rates price the projected income at the end of a holding period, and prudent practice assumes some expansion between the two to reflect aging and forecast risk. The cap rate is not a return; it is a pricing convention that embeds the market's growth and risk expectations. It relates to the discount rate approximately as discount rate minus expected income growth.

In an MMCG feasibility study: cap rates enter through the reversion assumptions in investor-facing analysis and through sanity checks that projected stabilized NOI supports a value consistent with the project budget and the lender's collateral analysis.

Related: Sample Reports.

Discount Rate

The discount rate is the required rate of return used to convert projected future cash flows into present value in a discounted cash flow analysis. It compensates for time and risk, and is commonly built up from a safe base rate plus premiums for illiquidity, asset risk, and execution risk, or observed from investor surveys and transaction evidence. In feasibility work the discount rate disciplines enthusiasm: a project whose cash flows only justify their cost at an unrealistically low discount rate is not feasible, merely arithmetic. Discount rates for unstabilized or development-stage projects carry premiums above stabilized-asset rates because the cash flows they discount are less certain.

In an MMCG feasibility study: discount rate selection is documented against survey evidence and the project's risk stage, and feasibility conclusions are tested for sensitivity to it rather than resting on a single point estimate.

Related: Sensitivity analysis (this glossary).

Debt Service Coverage Ratio (DSCR)

DSCR is the ratio of cash flow available for debt service to the debt service itself, and it is the central repayment metric in virtually every loan program MMCG serves. Conventions differ by context: property-level DSCR uses NOI against the property's debt service; business DSCR uses EBITDA or a defined cash flow measure; global DSCR aggregates the borrower's and guarantors' obligations and cash flows. The current SBA SOP anchors 7(a) repayment analysis to a 1.15x benchmark, USDA guaranteed lending conventionally expects coverage in the 1.25x range subject to lender policy, and conventional CRE typically underwrites 1.20x to 1.35x depending on asset class. The ratio is only as honest as its numerator: the definition of cash flow does the real work.

In an MMCG feasibility study: projected DSCR is computed under the program's convention and the lender's stated threshold, then stressed for rate, revenue, and expense scenarios, with the year each threshold is first met identified explicitly.

Cash Flow Available for Debt Service (CFADS)

CFADS is the cash flow measure that actually pays the loan: operating cash flow after taxes, necessary capital expenditure, and working capital movement, but before debt service. It exists because NOI and EBITDA are accounting conveniences that can flatter repayment capacity; a fuel retailer with heavy equipment replacement cycles or a hotel with a brand-mandated FF&E reserve pays debt from what remains after those obligations, not before. Sophisticated credit analysis defines CFADS explicitly in the credit agreement or memo, and the definition chosen (treatment of reserves, distributions, and owner compensation) frequently matters more to the coverage conclusion than the projection itself.

In an MMCG feasibility study: repayment analysis states its cash flow definition explicitly and reconciles NOI, EBITDA, and CFADS views, so the lender's coverage calculation and the study's are the same calculation.

Debt Yield

Debt yield is net operating income divided by the loan amount, expressed as a percentage. Its virtue is what it ignores: unlike DSCR it is unaffected by interest rate and amortization, and unlike LTV it is unaffected by valuation opinion, making it the cleanest measure of how much income cushion stands behind each dollar lent. A 10 percent debt yield means the property's income could repay the loan in ten years if devoted entirely to that purpose. Conventional CRE lenders commonly set minimums in the 8 to 10 percent range, higher for operationally intensive or volatile asset classes. Debt yield has become the sizing constraint of record in disciplined credit shops precisely because it cannot be engineered with structure.

In an MMCG feasibility study: projected stabilized debt yield is reported alongside DSCR and LTV, giving the credit file a rate-independent view of proceeds against income.

Related: Sample Reports.

Loan-to-Value (LTV) and Loan-to-Cost (LTC)

LTV is the loan amount divided by appraised value; LTC is the loan amount divided by total project cost. On stabilized acquisitions the two converge, but in development they diverge and both matter: LTC controls how much of the budget the lender funds (and therefore how much equity is real), while LTV controls the exit and collateral position once value is created. Program structures encode these limits: the SBA 504 structure places a senior lender at 50 percent of project cost with a CDC debenture behind it, USDA guaranteed lending applies collateral discounting conventions by asset type, and conventional construction lending typically pairs an LTC ceiling with an as-stabilized LTV test.

In an MMCG feasibility study: the sources-and-uses and projection model report both ratios against the applicable program structure, so the reviewer can see the equity position at closing and the collateral position at stabilization.

Related: SBA 504 program entry (this glossary); SBA/USDA Loan Comparison Calculator (tool).

Break-Even Occupancy

Break-even occupancy is the occupancy (or utilization) level at which effective gross income exactly covers operating expenses plus debt service: the point below which the property consumes cash. It is computed as (operating expenses plus debt service) divided by potential gross income. Lenders read it as a margin of safety: the distance between projected stabilized occupancy and break-even is the cushion the deal has against underperformance. A project stabilizing at 92 percent with break-even at 87 percent has little room for error; the same project with break-even at 70 percent is structurally resilient. The metric generalizes cleanly to operating businesses as break-even volume or break-even revenue.

In an MMCG feasibility study: break-even occupancy or volume is calculated and compared against both the projection and the market's observed performance range, making the safety margin explicit rather than implied.

Stabilization / Stabilized Occupancy

Stabilization is the point at which a property or operating business reaches the sustainable performance level its market position supports: occupancy, census, membership, or volume consistent with long-run competitive equilibrium rather than lease-up momentum or opening promotions. The stabilized profile (occupancy, rate, expense ratio) is the state on which permanent financing, the as-stabilized appraisal scenario, and the feasibility conclusion all rest. Time-to-stabilization is as important as the level: it determines interest carry, operating deficits, and reserve requirements during ramp-up. Stabilization definitions are asset-class conventions and should be stated, not assumed.

In an MMCG feasibility study: the stabilization point is defined explicitly (level and date), derived from comparable ramp-up evidence, and used consistently across the demand analysis, the financial projections, and the coverage tests.

Related: Absorption; As-Stabilized Value (this glossary).

Sensitivity Analysis

Sensitivity analysis tests how a project's feasibility conclusion responds to changes in its key assumptions. Single-variable sensitivity moves one input at a time (rate, occupancy, ADR, fuel margin) and observes the effect on DSCR and cash flow; scenario analysis moves coherent bundles of assumptions together (base, downside, upside); break-even analysis solves for the input level at which the project just covers its obligations. The purpose is not decoration: a feasibility conclusion is credible in proportion to the stress it survives, and a study that presents only the base case has answered the wrong question. Lenders increasingly expect the downside case to be underwritten, not merely displayed.

In an MMCG feasibility study: every study carries a structured sensitivity program, including interest rate stress, revenue stress, and expense stress against the program's DSCR threshold, with the failure point of each variable identified.

Internal Rate of Return (IRR)

IRR is the discount rate at which the net present value of a project's cash flows equals zero: the annualized return the investment actually earns given its timing. Unlevered IRR measures the project itself; levered IRR measures the equity position after financing, and the spread between them is the work done by leverage. IRR complements the lender-facing ratios: a project can cover its debt comfortably yet earn its equity an inadequate return, and capital that cannot earn its required return eventually stops showing up, which is itself a feasibility problem. IRR conclusions are only as good as the reversion assumptions embedded in the terminal cash flow.

In an MMCG feasibility study: investor-facing engagements report levered and unlevered IRR under the base and stress cases, with terminal assumptions stated, so equity feasibility is tested alongside debt feasibility.

Related: Sample Reports.

Equity Injection (SBA)

Equity injection is the cash and qualifying value a borrower must contribute to an SBA-financed project before the loan funds, verified by the lender under the current SOP. For startups and changes of ownership, the current SOP requires a minimum injection of 10 percent of total project costs, with documented rules on what qualifies: cash from verifiable sources, assets contributed at supportable value, and seller debt only when it sits on full standby for the loan's term (and, under current rules, only for a limited portion of the requirement). The injection test is a cash-in test, distinct from USDA's balance-sheet equity construct, and injection verification failures are among the most common causes of screen-outs and repair actions.

In an MMCG feasibility study: the sources-and-uses reconciliation identifies the injection, its sources, and its treatment under the current SOP, so the feasibility projections and the lender's eligibility analysis rest on the same capital structure.

Related: Equity injection article (blog); Tangible Balance Sheet Equity (this glossary).

4. SBA Programs and Regulatory

The terms in this section cover the mechanics of the two flagship SBA loan programs, the regulatory apparatus that governs them, and the performance vocabulary used when analyzing SBA loan data.

SBA 7(a) Loan Program

The 7(a) program is SBA's flagship guaranty program: a private lender makes the loan, and SBA guarantees a portion of it, currently 85 percent for loans up to $150,000 and 75 percent above that, up to a maximum loan amount of $5 million. Eligible uses span owner-occupied real estate, construction, business acquisition, equipment, working capital, and refinance, which is what makes 7(a) the default vehicle for financing operating businesses. Because 7(a) reaches borrowers who cannot obtain conventional credit on reasonable terms, projection-based repayment analysis carries unusual weight in the file, and independent feasibility studies enter precisely where projections, startups, and special-purpose properties intersect.

In an MMCG feasibility study: 7(a) engagements are structured around the current SOP's repayment and feasibility expectations, testing projected coverage against the program benchmark and documenting the market evidence behind every projection the lender underwrites.

SBA 504 Loan Program

The 504 program finances fixed assets (land, buildings, construction, long-lived equipment) through a three-party structure: a third-party lender provides a senior loan of typically 50 percent of project cost, a Certified Development Company provides an SBA-guaranteed debenture of up to 40 percent, and the borrower contributes the remainder, typically 10 percent. The borrower's contribution rises by 5 percent if the property is special-purpose and by 5 percent if the business is new, stacking to 20 percent when both apply. The program carries statutory economic development goals, met through job creation or retention or through defined public policy objectives. The widely repeated "10 percent down" description is the floor, not the rule.

In an MMCG feasibility study: the sources-and-uses is built to the three-party structure and the applicable injection tier, and job creation projections are grounded in the study's staffing model rather than asserted separately.

Certified Development Company (CDC)

A CDC is a nonprofit corporation certified by SBA to originate and service the debenture portion of 504 loans within its area of operations, in partnership with third-party lenders. CDCs carry the program's economic development mandate: they underwrite the 504 portion, shepherd the file through SBA, close the debenture, and service it for its term. Designations such as ALP (Accredited Lenders Program) and PCLP (Premier Certified Lenders Program) grant experienced CDCs expedited processing authority. For borrowers and referring lenders, the CDC is the procedural center of gravity of any 504 transaction, and CDC review standards are effectively part of the program's underwriting requirements.

In an MMCG feasibility study: reports for 504 transactions are built to survive both the third-party lender's credit review and the CDC's program-compliance review, which are separate gates with separate checklists.

Debenture (504 Context)

The debenture is the instrument that funds the CDC's portion of a 504 project: an SBA-guaranteed obligation pooled monthly with other debentures and sold to investors, with the proceeds funding the borrower's second-lien loan. Because debentures price off capital markets at issuance, the borrower receives a fixed, fully amortizing rate for the debenture's full term, currently offered in 10, 20, and 25 year maturities. The result is the program's signature economics: long-term fixed-rate financing on the junior piece of the capital stack, insulated from the floating-rate exposure that dominates conventional construction and mini-perm lending.

In an MMCG feasibility study: debt service on the 504 portion is modeled on the debenture's fixed, fully amortizing profile, with rate assumptions documented as of the analysis date and stressed in sensitivity scenarios.

Third-Party Lender (504 Context)

The third-party lender is the bank or credit union holding the senior 50 percent position in a 504 transaction, secured by a first lien on the project assets, with the CDC's debenture in second position. The senior lender sets its own credit terms within program rules, and its willingness to lend is the transaction's first gate: no third-party lender, no 504 project. The interplay of lien positions is the program's risk allocation: the senior lender enjoys a low-leverage first mortgage, while SBA's guarantee absorbs the junior risk, which is why senior 504 paper is among the more conservative CRE exposures a bank can hold.

In an MMCG feasibility study: the study serves both audiences simultaneously, the senior lender's conventional credit analysis and the CDC/SBA program review, without duplicating either institution's own underwriting role.

SBA Guaranty Fee and 504 Fees

SBA programs are funded in part by fees set annually. On 7(a), the borrower-paid upfront guaranty fee is tiered by loan size and maturity, and lenders pay an ongoing annual service fee on the guaranteed portion; the schedule is established each fiscal year by SBA notice, and in some years SBA has reduced or waived fees for smaller loans, so the current fiscal year's notice governs. On 504, the fee stack includes the CDC processing fee, a funding fee, and an ongoing guarantee fee embedded in the debenture's effective rate. Fees are financing costs, not analytical details: they belong in the project budget and the effective-rate comparison between programs.

In an MMCG feasibility study: current-year fees are carried into the sources-and-uses and the debt service model, so program comparisons reflect effective cost rather than note rate.

SBA Size Standards

SBA lending is reserved for small businesses, defined by size standards. The primary test is industry-specific under the applicant's NAICS code, expressed as a ceiling on average annual receipts or employee count. The alternative size standard offers a second path used heavily in real-estate-backed lending: a business qualifies if its tangible net worth and its two-year average after-tax net income fall below statutory ceilings, thresholds that SBA adjusts through rulemaking, so the current SOP and 13 CFR Part 121 govern the operative figures. Affiliation rules aggregate related entities, which is where size analysis most often becomes genuinely difficult.

In an MMCG feasibility study: size eligibility is the lender's determination, but the study's industry classification and financial summaries are prepared consistently with the NAICS code and entity structure the eligibility analysis relies on.

Credit Elsewhere Test

The credit elsewhere test is the statutory requirement that SBA-guaranteed credit go only to borrowers who cannot obtain the financing on reasonable terms from non-federal sources. Lenders must document the specific factors supporting that conclusion in the loan file. The test defines the program's population and, with it, the analytical stakes: SBA borrowers are by definition marginal to conventional credit, often startups, special-purpose properties, or thin-equity acquisitions, which is exactly the population where projection quality decides outcomes. The test is why independent feasibility analysis carries more weight in SBA files than in conventional ones: the conventional fallback of historical cash flow is frequently absent.

In an MMCG feasibility study: the study supplies the independent, evidence-based projection analysis that the credit elsewhere population inherently requires, giving the lender documented support where historical performance cannot provide it.

Occupancy Requirements (SBA Real Estate)

SBA financing of real estate is for owner-occupants, not investors. Under the current SOP, an existing building qualifies when the operating business occupies at least 51 percent of the rentable space; new construction qualifies at a 60 percent initial occupancy threshold, with the SOP's framework contemplating the business growing into additional space over time. The remainder may be leased out, which makes mixed occupancy permissible but pure investment property ineligible. Occupancy math is measured against rentable square footage and audited at closing, and marginal cases (multi-building projects, related-party leases) are a recurring source of eligibility findings.

In an MMCG feasibility study: for projects with lease-out components, the demand analysis covers both the operating business and the tenant space, and the occupancy computation used in the study matches the eligibility computation in the file.

SOP 50 10 (Standard Operating Procedure)

SOP 50 10 is the governing rulebook for SBA 7(a) and 504 origination: eligibility, underwriting requirements, equity injection, collateral, fees, and documentation. The current version, SOP 50 10 8, took effect June 1, 2025, superseding SOP 50 10 7.1, and SBA amends the framework through periodic notices between editions. The SOP is where feasibility studies acquire regulatory meaning: its provisions on startups, projection-based repayment, and special-purpose properties are the operative triggers for independent feasibility analysis in SBA files. Because each SOP revision can move underwriting requirements, competent practice always cites the version in effect for the application, not the version remembered.

In an MMCG feasibility study: studies are structured to the SOP edition governing the transaction, and the report's scope note identifies that edition so reviewers can map the study directly to the requirements they are auditing against.

SBA Franchise Directory

The SBA Franchise Directory is the agency's registry of franchise and other brand-affiliation agreements reviewed for SBA eligibility. The directory was eliminated in 2023 under SOP 50 10 7, which shifted affiliation and eligibility review to lenders, and then reinstated with the current SOP effective mid-2025, restoring a centralized eligibility determination that lenders can rely on. For franchised concepts (fitness, QSR, car wash, hotels, service brands), directory status is a gating item: it resolves whether the brand relationship creates affiliation problems before underwriting effort is spent. The directory's history is a reminder that SBA eligibility mechanics move, and file practice must move with them.

In an MMCG feasibility study: for franchised projects, the study's brand and unit-economics analysis is prepared against the franchise system's actual performance evidence, complementing the eligibility determination the directory and lender make.

Charge-Off vs. Default (SBA Loan Performance)

In SBA loan-level data, these terms are not interchangeable. A default is an event: the borrower fails to perform. A guaranty purchase follows when the lender requests SBA honor its guarantee. A charge-off (status CHGOFF in SBA's FOIA datasets) is the accounting endpoint: the loan is written off after recovery efforts, and it is the correct basis for measuring realized credit losses. SBA's public loan files carry status codes including PIF (paid in full), CHGOFF, CANCLD (cancelled), and EXEMPT, and rigorous industry risk analysis computes charge-off rates from resolved loans rather than quoting "default rates" that conflate delinquency, purchase, and loss. The distinction changes conclusions: many defaulted loans cure or resolve without loss.

In an MMCG feasibility study: industry risk benchmarking draws on MMCG's proprietary analysis of the full SBA FOIA dataset of more than 900,000 loan records, computing NAICS-level charge-off rates on a consistent resolved-loan basis (for example, express car wash performance versus the all-industry benchmark) so the lender sees the program's actual loss experience in the subject's industry.

5. USDA Programs

The terms in this section cover USDA Rural Development guaranteed lending: the consolidated OneRD framework, the individual programs, the deal-lifecycle instruments, and the regulatory feasibility requirements that define MMCG's deepest practice area.

OneRD Guarantee Loan Initiative

OneRD is USDA's 2020 consolidation of four guaranteed loan programs (Business & Industry, Community Facilities guaranteed, Water & Waste Disposal guaranteed, and Rural Energy for America guaranteed) under a single regulation, 7 CFR Part 5001, with standardized forms, common definitions, and a single annual notice setting each fiscal year's fees, guarantee percentages, and funding levels. Before OneRD, each program ran on its own regulation with its own vocabulary; after it, lenders face one framework across all four. The annual-notice mechanism is the initiative's most practical feature and its most common trap: figures quoted from a prior fiscal year may simply no longer apply.

In an MMCG feasibility study: studies for any OneRD program are prepared to 7 CFR Part 5001's requirements and the current fiscal year's notice, with both cited in the report's scope note.

USDA Business & Industry (B&I) Loan Guarantee Program

B&I is USDA's flagship rural business program: the agency guarantees loans made by approved lenders to businesses in eligible rural areas, for purposes spanning real estate, construction, equipment, working capital, and certain refinances. Loans are available up to $25 million as standard, with higher ceilings for qualifying rural cooperative projects. Guarantee percentages are set by the annual notice, and recent notices have provided guarantees of up to 80 percent. B&I's defining feature for feasibility practice is regulatory: the program's framework requires independent feasibility studies for transactions that depend on projected rather than historical performance, making the study a named document in the application, not an optional exhibit.

In an MMCG feasibility study: B&I engagements follow the regulation's feasibility framework and the conditional commitment's stated conditions, and are prepared for review by both the lender and the USDA state office.

Rural Energy for America Program (REAP)

REAP finances renewable energy systems and energy efficiency improvements for agricultural producers and rural small businesses, through guaranteed loans, grants, and combinations of the two. Eligible technologies include solar, wind, anaerobic digestion, biomass, geothermal, and efficiency retrofits. Grant share is set by program notice and funding cycle: under Inflation Reduction Act funding, grants reached up to 50 percent of eligible project cost, a level tied to that funding's availability, so the current notice governs what share applies. Energy projects carry a distinctive feasibility burden: technical feasibility (production estimates, interconnection, resource assessment) stands alongside the financial analysis rather than behind it.

In an MMCG feasibility study: REAP engagements integrate the technical production case with the financial model, so the energy yield the engineers project and the revenue the pro forma assumes are the same numbers.

Community Facilities (CF) Program

The Community Facilities program finances essential community infrastructure in rural areas: healthcare facilities, schools and childcare, public safety, and other public services, through direct loans, guaranteed loans, and grants. Eligibility is limited to rural areas of 20,000 or fewer residents, a tighter geography than B&I's, and eligible borrowers include public bodies, nonprofits, and tribal entities. CF projects present a distinct analytical problem: many are mission-driven facilities whose demand is demographic and whose revenue is programmatic (reimbursements, tuition, appropriations), so feasibility analysis must test both the community's need and the revenue model's durability, often for borrowers without conventional operating histories.

In an MMCG feasibility study: CF engagements pair a demographic needs assessment with a revenue-source analysis appropriate to the facility type, structured to the guaranteed program's requirements where a lender is involved.

Rural Area Eligibility

"Rural" is program-specific in USDA lending. For B&I, eligible areas lie outside cities or towns of more than 50,000 and their adjacent urbanized areas; for Community Facilities, the ceiling is 20,000; REAP applies its own geography rules for rural small businesses (agricultural producers may qualify regardless of location). Determinations are made through USDA's official eligibility mapping tools, and boundaries shift as census data updates, so a site eligible in one cycle can become ineligible in the next. Eligibility is binary and jurisdictional: no strength of underwriting rescues an ineligible address, which is why site eligibility is the first check in any USDA transaction.

In an MMCG feasibility study: site eligibility is documented from the USDA eligibility map as of the analysis date and exhibited in the report, removing the question from the reviewer's open-items list.

Conditional Commitment

The conditional commitment is USDA's written commitment to issue a loan note guarantee, subject to enumerated conditions. It arrives before closing and construction, and it is the document that converts program requirements into transaction-specific obligations: the approved loan terms, required equity, insurance, construction monitoring, and, where applicable, acceptance of the feasibility study. The sequence matters: conditional commitment first, then closing and project execution, then the loan note guarantee once conditions are satisfied. Lenders and borrowers who treat the conditional commitment as the guarantee itself misread the risk: until conditions are met and the guarantee is issued, the lender holds an unguaranteed loan.

In an MMCG feasibility study: where the study is a named condition, the report is prepared and revised to the state office's acceptance, consistent with MMCG's acceptance guarantee.

Loan Note Guarantee

The loan note guarantee is the instrument USDA issues once the conditions of the conditional commitment are satisfied, typically at or after loan closing and project completion milestones. It obligates USDA to purchase the guaranteed percentage of the lender's loss on the covered loan, and the guaranteed portion is transferable, supporting an active secondary market in USDA-guaranteed paper. The guarantee attaches to the loan, not the project's success: it protects the lender against loss, subject to the lender having originated and serviced the loan in compliance with the regulation and the lender's agreement. Noncompliance is the classic route to a reduced or denied loss claim.

In an MMCG feasibility study: the study supports the file's compliance narrative, documenting that the projection-based underwriting the guarantee rests on was independently and competently performed.

Lender's Agreement

The lender's agreement is the master contract between USDA and an approved lender governing all of that lender's guaranteed loans under the OneRD framework: origination standards, servicing obligations, reporting, and loss claim procedures. Approved lender status under 7 CFR Part 5001 distinguishes regulated lenders (banks, credit unions, Farm Credit institutions), which qualify by virtue of their supervision, from non-regulated lenders, which must apply for approval and demonstrate capacity. The agreement is why USDA lending scales: program compliance is institutionalized at the lender level once, rather than negotiated transaction by transaction.

In an MMCG feasibility study: reports are prepared to the standards the lender has contracted to uphold, so the study slots into the lender's compliance file rather than creating exceptions in it.

Guarantee Fee and Annual Renewal Fee (USDA)

OneRD programs carry two fees set by the annual notice. The initial guarantee fee is a one-time charge computed on the guaranteed portion of the loan (recent notices have set it at 3 percent of the guaranteed amount, with reductions available for qualifying projects). The annual renewal fee is an ongoing charge, expressed in basis points and computed on the outstanding principal balance multiplied by the guarantee percentage, payable for the life of the guarantee. Because both reset by notice each fiscal year (the renewal fee rate is fixed for a loan at issuance), the current notice governs new transactions, and effective-cost comparisons between USDA and SBA executions must carry both fees.

In an MMCG feasibility study: current-notice fees are built into the project budget and debt service model, so the coverage analysis reflects the true cost of the guaranteed execution.

Tangible Balance Sheet Equity (USDA B&I)

USDA B&I underwrites equity as a balance-sheet condition rather than a cash-in event: the borrower must demonstrate required tangible balance sheet equity, conventionally 10 percent for existing businesses and 20 percent for new businesses, with higher requirements historically applied to energy projects, measured on a post-closing balance sheet prepared in accordance with GAAP and excluding intangibles and, per program convention, appraisal write-ups beyond what the regulation permits. This is the structural difference from SBA's equity injection, which tests cash contributed into the project. Lenders active in both programs routinely conflate the two; they are different tests, satisfied by different evidence, and a capital structure that passes one can fail the other.

In an MMCG feasibility study: the pro forma post-closing balance sheet is analyzed against the applicable equity requirement, and the report presents the calculation the state office will check, on the basis the regulation prescribes.

Feasibility Study Requirements (7 CFR Part 5001)

The OneRD regulation names the independent feasibility study as a required application document where repayment depends on projected performance: startups, expansions, and transactions whose projections depart materially from historical results. Program practice, carried forward from the legacy B&I regulation, frames the study around five dimensions: economic feasibility, market feasibility, technical feasibility, financial feasibility, and management feasibility, prepared by a qualified independent consultant with no financial interest in the project. This is the provision that defines the professional feasibility category in rural lending: the study is not the lender's memo and not the borrower's business plan, but a third document with its own author, standards, and accountability.

In an MMCG feasibility study: USDA reports are architected to the five-dimension framework, with each dimension separately evidenced and concluded, and the consultant's independence and qualifications certified in the report.

Loss Claim / Guaranteed Loan Loss (USDA)

When a USDA-guaranteed loan fails, the lender liquidates per its approved plan and files a loss claim; USDA then pays the guaranteed percentage of the eligible loss. The claim is subject to audit against the regulation and the lender's agreement: origination or servicing deficiencies (unverified equity, missing conditions, monitoring failures) can reduce or void the payment, a mechanism called a repair or denial. The vocabulary differs from SBA's: USDA practice speaks of loss claims and guarantee purchases rather than charge-offs, though the economic event is analogous. For portfolio analysis, USDA guaranteed loan performance is measured through claim experience rather than the loan-level public datasets SBA publishes.

In an MMCG feasibility study: the study's role is prophylactic: a compliant, independent feasibility file at origination is part of what protects the guarantee's enforceability if the credit later fails.

6. Asset-Class Metrics

Every operating asset class carries its own performance vocabulary, and feasibility credibility begins with speaking it precisely. The entries below cover the metrics that anchor revenue models across MMCG's most active asset classes.

Average Daily Rate (ADR)

ADR is rooms revenue divided by rooms sold: the average price achieved per occupied room-night. It measures rate positioning, not performance; a hotel can post a strong ADR while running empty. ADR is read against the competitive set: a property's ADR index (its ADR relative to the compset average) expresses whether it prices above or below its market. In projections, ADR discipline means anchoring the subject's rate to the compset's actual achieved rates, adjusted for product quality, brand, and age, rather than to aspirational rack rates. ADR and occupancy trade against each other, which is why neither is meaningful alone.

In an MMCG feasibility study: projected ADR is positioned explicitly against the STR/CoStar competitive set's achieved rates, with the premium or discount to the compset justified line by line.

Revenue Per Available Room (RevPAR)

RevPAR is rooms revenue divided by rooms available (equivalently, ADR multiplied by occupancy): the top-line productivity of the entire room inventory, occupied or not. It is the primary performance metric in hospitality because it integrates the rate-versus-occupancy tradeoff into a single number. Against the competitive set, RevPAR penetration (the RevPAR index) expresses fair share: an index of 100 means the property earns exactly its proportional share of compset revenue; a stabilized projection materially above 100 requires an argument, because it claims the subject will outperform incumbent competitors. RevPAR excludes food, beverage, and other revenue, which matters for full-service assets.

In an MMCG feasibility study: the stabilized projection is expressed as a RevPAR penetration index against the defined compset, and any index above fair share is defended with specific product, brand, and location evidence.

Chain Scale

Chain scale is the industry's segmentation of hotel brands by price positioning, maintained in the STR/CoStar framework: luxury, upper upscale, upscale, upper midscale, midscale, and economy, with independent hotels tracked separately. Chain scale is the grammar of competitive set construction: a compset drawn across scales produces benchmarks that flatter or punish the subject arbitrarily, and reviewers check compset composition before they check the numbers it produces. Scale also proxies cost structure and demand mix, which is why development feasibility differs so sharply between, say, upper midscale select-service and upper upscale full-service product on the same corridor.

In an MMCG feasibility study: the competitive set is constructed within the subject's chain scale and product type, with any cross-scale inclusion disclosed and justified.

Throughput (Car Wash)

Throughput is the volume capacity of a wash: cars per hour a tunnel can process, determined by tunnel length, conveyor speed, equipment configuration, and loading efficiency. Theoretical throughput (the equipment's rated capacity) exceeds effective throughput (what the site achieves with real staffing, spacing, and demand arrival patterns), and the gap between them is where optimistic pro formas hide. Throughput matters because it sets the revenue ceiling: a site's achievable volume is the lesser of what the market delivers and what the tunnel can process at peak, and peak-hour capacity, not daily average, is what constrains membership growth in strong markets.

In an MMCG feasibility study: the revenue model is capacity-constrained, with effective throughput derived from the specified equipment and site plan and tested against the demand model's peak-period volumes.

Membership Penetration (Car Wash)

Membership penetration is the share of an express wash's volume and revenue delivered by unlimited-wash club members rather than retail (pay-per-wash) customers. Mature express sites conventionally derive a majority of revenue from memberships, with industry experience commonly in the 60 to 70 percent range and above at well-run sites, which transforms the asset's economics: recurring revenue, weather insulation, and predictable cash flow, offset by per-member usage costs and churn. The membership ramp (sign-up pace, churn rate, average revenue per member) is the single most consequential assumption in express car wash feasibility, and it is testable against the maturity curves of comparable sites.

In an MMCG feasibility study: the membership ramp is modeled explicitly (acquisition, churn, ARPM) and benchmarked against observed maturity curves and the market's existing membership saturation across competing washes.

Rate Per Pad / Site Revenue Conventions (RV Parks)

RV park revenue is quoted per pad (site) across a rate architecture: daily, weekly, monthly, and seasonal rates, differentiated by site type (full hookup versus partial, pull-through versus back-in, waterfront or premium locations) and supplemented by park models, cabins, and glamping units that earn hotel-like rates. Analysis increasingly borrows hospitality's vocabulary: revenue per available site integrates rate and occupancy the way RevPAR does for hotels. The mix decision is the economic core: transient sites earn higher daily rates with volatile occupancy, while monthly and seasonal sites earn less per night with far steadier cash flow, and the optimal mix is a market conclusion, not a preference.

In an MMCG feasibility study: the revenue model is built by site type and stay category, with rates benchmarked against named competing parks and the transient/extended-stay mix derived from observed market demand.

Seasonality (Outdoor Hospitality)

Seasonality is the concentration of demand in a defined operating season, and in outdoor hospitality it is structural, not incidental: a northern campground may earn most of its revenue in twenty weeks, while a Sunbelt park inverts the calendar with winter snowbird demand. Seasonality changes what "occupancy" means: annualized occupancy understates a seasonal park's health, and in-season occupancy overstates it, so credible analysis states both, alongside the shoulder-season strategy that determines whether the season can be stretched. For lenders, seasonality is a cash flow timing problem: debt service is monthly, revenue is not, and the working capital bridge between them is part of feasibility.

In an MMCG feasibility study: the projection is built monthly, occupancy is reported on both annualized and in-season bases, and the seasonal cash flow trough is tested against debt service and reserves.

Census (Senior Housing)

Census is the operator's word for occupancy in senior living and skilled nursing: the count of occupied units or beds, often expressed against licensed or operational capacity. The vocabulary matters because it signals the operational reality: census is managed daily through move-ins, move-outs, attrition, and referral relationships, and its composition (census mix by care level or payor) drives revenue more than the headline percentage. Stabilized census conventions in assisted living and memory care sit in the low-to-mid 90s in healthy markets under NIC MAP-style measurement, and time-to-stabilized-census is the central risk of new development, since fill rates are constrained by the pace of need-driven move-ins.

In an MMCG feasibility study: the census ramp is modeled monthly from move-in velocity evidence in the subject's market, and stabilized census is benchmarked against NIC MAP-consistent data for the relevant care segments.

Payor Mix (Senior Housing and Healthcare)

Payor mix is the composition of revenue by payment source: private pay, Medicaid, Medicare, managed care, and veterans' benefits. It is the quality-of-revenue metric in care-based assets: assisted living and memory care are predominantly private-pay products, while skilled nursing leans on Medicaid for long-stay residents and Medicare for short-stay rehabilitation, each with different rates, margins, and policy exposure. Two communities with identical census can have entirely different economics because of mix, and reimbursement-dependent revenue imports regulatory risk that private-pay revenue does not carry. Feasibility for care assets is therefore a mix projection as much as an occupancy projection.

In an MMCG feasibility study: revenue is modeled by payor at payor-specific rates, the market's income and asset demographics are tested against the private-pay assumption, and reimbursement exposure is identified as a distinct risk factor.

Rent Per Square Foot Conventions (Flex / Industrial)

Industrial and flex rents are quoted in conventions that must be normalized before comparison: triple net (NNN, tenant pays taxes, insurance, and maintenance), modified gross, or full service, quoted annually per square foot in most markets and monthly in some (notably California). Flex product adds structural rent drivers: clear height, loading configuration, power, and the office finish percentage, which can move effective rent materially between otherwise similar buildings. Comparable analysis that mixes quoting conventions, or ignores finish and functionality differences, produces rent conclusions that are precisely wrong. Effective rent (net of concessions) rather than asking rent is the underwriting-relevant figure.

In an MMCG feasibility study: comparables are normalized to a single quoting convention, adjusted for functional characteristics, and concluded as an effective NNN-equivalent rent the financial model then consumes.

Fuel Margin (Convenience and Fuel Retail)

Fuel margin is the retailer's gross profit on fuel, conventionally quoted in cents per gallon (CPG): street price minus delivered cost, before credit card fees, which are large enough that disciplined analysis distinguishes gross from net-of-card margin. Pool margin blends grades into a single figure. Fuel margins are volatile, moving inversely with wholesale price swings in the short run, and industry-wide margins have run structurally higher in recent years than their long-run historical range, a shift feasibility work should treat cautiously rather than capitalize. Fuel is traffic and gross profit dollars; the store is where the margin percentage lives.

In an MMCG feasibility study: fuel margin assumptions are set conservatively against NACS-consistent industry data and regional evidence, stressed in sensitivity analysis, and never extrapolated from recent peak years.

Inside Sales (Convenience Retail)

Inside sales are the store's revenue: merchandise, tobacco, packaged beverages, snacks, and increasingly foodservice, as distinct from fuel revenue. The economics invert the revenue mix: fuel dominates sales dollars while inside sales dominate gross profit dollars at typical sites, and prepared food carries the highest margins in the store, which is why the industry's winners are effectively restaurants with fuel canopies. Inside sales per store, basket composition, and foodservice share are the productivity metrics that separate operators. For new-to-industry projects, the inside sales projection is the feasibility question: fuel volume can be modeled from traffic, but store productivity must be earned.

In an MMCG feasibility study: inside sales are projected from traffic capture, basket benchmarks, and the specified foodservice program, benchmarked against NACS-consistent industry productivity data for comparable formats.

Self-Storage Conventions

Self-storage carries a compact but treacherous vocabulary. Net rentable square feet (the space actually leasable) differs from gross building area. Physical occupancy (units or square feet occupied) diverges from economic occupancy (revenue achieved versus gross potential at street rates), and the gap between them measures discounting, concessions, and delinquency. Street rate (offered to new customers) differs from in-place rate, and the industry's revenue management runs on existing customer rate increases (ECRI): move customers in at promotional rates, then escalate. Climate-controlled space commands documented premiums. Lease-up pace and the street/in-place spread are where storage projections most often overreach.

In an MMCG feasibility study: projections distinguish physical from economic occupancy, model lease-up from comparable facility evidence, and treat street-rate revenue as an entry point rather than the stabilized run rate.

Multifamily Conventions

Multifamily underwriting runs on a handful of conventions that discipline the projection. Asking rent is the advertised figure; effective rent nets out concessions; loss-to-lease measures the gap between in-place rents and current market. Economic occupancy (collections against gross potential) sits below physical occupancy, absorbing delinquency and concessions. Rents are quoted per unit and per square foot, and unit mix and average unit size drive both. In lease-up, the absorption pace (units per month) determines the interest carry and the stabilization date; defensible paces come from the observed lease-ups of recent competitive deliveries, not from national averages applied to a specific submarket.

In an MMCG feasibility study: the rent conclusion is built from a normalized comparable set, the lease-up schedule from documented recent deliveries in the submarket, and the model carries economic rather than physical occupancy into the coverage analysis.

Using This Glossary

Terminology is not decoration in lender-grade work; it is the interface between the study, the credit file, and the reviewer. Every term above appears in MMCG feasibility studies the way it is defined here, and the definitions follow the regulations, standards, and data conventions in effect as of mid-2026. Program figures that reset by fiscal-year notice (SBA fee schedules, USDA guarantee percentages and fees, REAP grant shares) are stated by mechanism, and the notice or SOP edition current at your application date governs.

MMCG Invest, LLC is a premier feasibility study company that prepares independent, lender-grade feasibility studies for SBA 7(a), SBA 504, USDA, and conventional transactions across more than 30 asset classes nationwide. To discuss a transaction, book a meeting with our team.

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Engagements are led by Michal Mohelsky, J.D., Practicing Affiliate of the Appraisal Institute. Feasibility studies are prepared under USPAP discipline, aligned with SBA SOP 50 10 8 for 7(a) and 504 loans and with 7 CFR Part 5001, Appendix A to Subpart D for USDA Business and Industry, REAP, and Community Facilities financing. Engagements start at $4,900 with fixed-fee scoping. Standard delivery is 9 to 16 business days, with rush turnaround available from 5 days. A senior analyst responds to proposal requests within 12 business hours from the firm's San Francisco office at 27 Maiden Lane, Suite 625.