Charter School Feasibility Study: Enrollment, Funding and Facility Debt

A charter school feasibility study tells a lender, a bond buyer or a school board whether one charter school, in one building, can enroll enough students, grade by grade, to earn the public per-pupil revenue that pays its staff, runs its building and repays its facility debt for as long as that debt is outstanding. It answers with evidence on demand, on state funding rules, on the charter itself and on the building, because a charter school has no tax base and no tuition: its students are its only reliable source of repayment.

Three facts shape almost every charter school facility loan:

• The sector is large and still growing inside a shrinking pool. In 2022-23, 7,998 charter schools enrolled 3,717,857 students, 7.6% of public school enrollment [1]. Charter enrollment grew from 3,143,269 in 2017-18 to 3,717,857 in 2022-23 while enrollment in all public schools fell from 50,330,241 to 48,860,517 [2].
• The child population is falling in most states. The number of residents aged 5 to 17 fell about 2.0% between April 2020 and July 2025, and fell in 37 of the 50 states and the District of Columbia [3]. A new school now wins most of its students from existing schools, not from growth.
• The charter is the loan's clock. Arizona charters run fifteen years and renew for twenty [4]; Minnesota contracts run up to five years [5]; Florida allows a 15-year charter for a nonprofit school expressly "to facilitate access to long-term financial resources for charter school construction" [6]. A loan that outlives the charter carries renewal risk that the study must price.

This page sets out what the study must prove, the federal and state data it draws on, the state rules that decide revenue, term and closure, the capital sources that finance charter buildings and how each reads the result. For a worked example of the method, see the model study of a K-8 charter school in rural Arizona financed under USDA Community Facilities. For the program itself, see USDA loan programs.

Every study ends in one of three conclusions: feasible as proposed; feasible with stated conditions, such as a smaller first phase, a slower grade build-out, a lease before a purchase or a larger reserve; or not feasible as proposed, with the changes that would make it work.

What is a charter school feasibility study?

It is an independent analysis, written for the lender's or bond buyer's file, of whether a proposed, expanding or existing charter school can support the financing of its building. USDA's guaranteed loan rule defines a feasibility study as a report by an independent qualified consultant "evaluating the economic, market, technical, financial, and management feasibility of the proposed project" [7]. Those five parts fit a charter school well, because a school can fail on any one of them: too few families choose it, the state formula pays less than planned, the building cannot be permitted in time, the debt takes too large a share of revenue, or the board and leader cannot run a school that keeps its charter.

Federal law describes what a charter school is. It is a public school that operates under a state charter statute, "is nonsectarian in its programs," does not charge tuition, and admits students by lottery when more apply than it can seat [8]. Each of those features matters to the credit. No tuition means the school cannot raise price to cover a shortfall. The lottery rule means a waiting list is real evidence of demand only if it was produced under the school's published admission rules. Public status means the school's money, and often its property, carry public conditions.

The study follows the money from the student to the lender, and the charter from approval to renewal. Two related pages explain where the study sits among other reports: feasibility study versus appraisal and feasibility study versus business plan. For what makes any study bankable, see what a bankable feasibility study is.

What does a lender need the study to prove?

A lender needs proof that the school's own per-pupil revenue will repay the loan through the life of the debt, including at least one charter renewal, and that nothing in the state's rules, the charter or the building breaks that chain. USDA's direct loan rule states the test for Community Facilities borrowers: revenues must be sufficient "to provide for facility operation and maintenance, a reasonable reserve, and debt payment" [9].

Exhibit 1. What the lender asks and what the study shows

Source: statutes and regulations as cited in each row.

Why is a charter school facility loan an enrollment credit?

Because almost all of the money that repays it arrives per student, under a state formula, and stops when students leave. A charter school cannot levy a tax or charge tuition to resident families, and in Arizona it cannot issue bonds [10]. Its building payment is an operating expense paid out of the same per-pupil dollars that pay teachers.

Arizona shows the structure clearly. State aid to charter schools "shall be provided as a single amount based on average daily membership without categorical distinctions between maintenance and operations or capital" [10]. On top of the formula base, a charter receives charter additional assistance of $2,174.54 per student in kindergarten through grade eight [10], which is the only state payment that stands in for the capital funding a district raises from local taxes. Every dollar of rent or debt service comes out of those per-student amounts.

The count that drives the money is itself a rule. In Arizona, "withdrawals" include students "absent for ten consecutive school days" [11], and a charter's count starts from an estimate based on registration, is revised after the first forty, one hundred or two hundred days in session, and must be revised before May 15 [10]. A school that enrolls 450 students in August and loses 30 by October is paid for the students it keeps, not the ones it signed up.

Exhibit 2. How a charter school credit differs from a school district credit

Source: statutes cited in each row; FSC summary.

The question behind every other question: will families keep choosing it?

A district keeps its students unless they leave. A charter school must win each student and then keep the student, grade after grade, against district schools, other charters, private schools and, in some states, education savings accounts. Arizona's legislative budget staff assumed a 1.6% decline in public school enrollment in fiscal 2027: 0.9% from demographic projections and an additional 0.7% from students shifting to the state's education savings account program [19]. A charter study in a state with a large voucher or savings account program must show where the school's families come from and what would make them leave.

How large is the charter sector, state by state?

Charter schools enrolled 3,717,857 students in 2022-23, in every state with a charter law plus the District of Columbia, but the sector is concentrated: five states (California, Texas, Florida, Arizona and New York) held 1,905,113 of those students, just over half [1]. The share of public enrollment ranges from less than 1% in several states to 20.5% in Arizona and 45.3% in the District of Columbia [1]. Exhibit 3 sets each state's charter sector beside its total public enrollment trend and its school-age population trend, the three numbers that frame demand.

Exhibit 3. Charter schools, public enrollment and school-age population by state

Source: NCES, Digest of Education Statistics 2023, Table 216.90 (charter schools and enrollment, 2017-18 and 2022-23) [1]; NCES, Digest 2024, Table 203.20 (public enrollment, fall 2019 and fall 2023) [20]; Census Bureau, Vintage 2025 state population by single year of age, summed for ages 5 to 17 over all race groups by FSC [3]. Changes for states whose 2017-18 charter enrollment was under 1,000 are not shown.

Four patterns in Exhibit 3 matter for a study:

1. Charter growth and child population growth have come apart. Nevada's charter enrollment rose 51.8% from 2017-18 to 2022-23 while its residents aged 5 to 17 fell 1.0% from 2020 to 2025. Texas charter enrollment rose 44.2%; its school-age population rose 3.0%. Growth of this kind comes from share gains, and share gains have to be shown school by school.
2. High-share markets are the most contested. In Arizona and the District of Columbia, a new school competes with established charters as much as with district schools.
3. Several states have no charter schools to compare with. NCES reports no charter schools in Kentucky, and marks Montana, Nebraska, North Dakota, South Dakota and Vermont as having no charter school legislation in the data year [1]. A first school in a state has no local operating history for a lender to read, and the study must lean on the statute, the authorizer and comparable schools elsewhere.
4. Public enrollment fell in most states after 2019. It fell in 41 of the 50 states and the District of Columbia between fall 2019 and fall 2023, and fell 2.5% nationally [20]. A charter that grows in a shrinking market grows by taking students from someone, which is possible but must be evidenced.

How the sector has grown

Charter enrollment has risen every year in the national series except 2021-22, when it dipped by 5,582 students, and it gained most in elementary schools [2]. Exhibit 4 shows the series beside total public enrollment.

Exhibit 4. Charter school enrollment by school level, 2012-13 to 2022-23

Source: NCES, Digest of Education Statistics 2023, Table 216.20 [2]. Prekindergarten-only charter schools are included in the first column but not shown separately.

The NCES Condition of Education puts the long view plainly: between fall 2010 and fall 2021, charter enrollment "more than doubled, from 1.8 million to 3.7 million students," while traditional public school enrollment fell by 2.0 million [21]. Between fall 2019 and fall 2020, charter enrollment rose 7 percent while traditional public enrollment fell 4 percent [21]. A study that extrapolates a school's 2020 to 2022 growth forward is extrapolating an unusual period.

What charter schools look like compared with district schools

Charter schools are smaller, more urban and serve more low-income students than district schools. In 2022-23, 43.4% of charter schools had fewer than 300 students, against 30.9% of traditional public schools; 56.4% were in cities, against 24.9%; and only 12.0% were rural [22]. Those facts bear on the loan. A small school spreads its fixed costs, including its building, over fewer students. A rural charter is uncommon, so USDA Community Facilities financing, limited to rural places, can reach only a small part of the sector.

Exhibit 5. Charter and traditional public schools compared, 2022-23

Source: NCES, Digest of Education Statistics 2023, Table 216.30 [22].

The pupil/teacher ratio is a cost fact as well as an education fact: the expense model starts from the school's own staffing plan, tested against these norms.

Is the school-age population growing where the school will open?

In most places it is not, so the study has to show demand that does not depend on growth. Nationally, residents aged 5 to 17 fell from 54,595,956 in April 2020 to 53,529,481 in July 2025 [3]. The decline is uneven at the county level, and the county is the right first unit: it is where a lender's credit officer will look, and Census publishes the age bands a school study needs for every county each year.

Exhibit 6. School-age residents in sixteen large charter markets, April 2020 and July 2025

Source: Census Bureau, Vintage 2025 county population estimates by age and sex (CC-EST2025-AGESEX), April 1, 2020 estimates base (YEAR 1) and July 1, 2025 (YEAR 7) [23]. Ages 5 to 17 are the sum of the published 5 to 13 and 14 to 17 columns. Counties chosen by FSC to show large charter markets in the states discussed on this page, plus Yavapai County, Arizona, from the model study.

Two things stand out. Children aged 5 to 13, the elementary and middle school ages, fell faster than teenagers in most of these counties, so the decline is moving up through the grades: Los Angeles County lost 118,998 children aged 5 to 13 in five years. And growth, where it exists, is concentrated: Harris and Bexar counties in Texas and Wake County in North Carolina gained school-age residents, while the District of Columbia gained 8,281.

A county trend is only a frame. The study then builds a trade area from the addresses of the school's current or expected families, or for a new school from drive times, and counts children by age within it.

Smaller kindergarten classes are already in the pipeline

Public school enrollment by grade shows what is coming. In fall 2022, kindergarten enrollment nationally was 6.8% smaller than grade 8 enrollment [24]. In Arizona and Texas the gap was nearly 14% [24]. A K-8 school that plans to fill its upper grades from its own lower grades is planning on cohorts that are smaller than today's.

Exhibit 7. Public school enrollment by grade, fall 2022

Source: NCES, Digest of Education Statistics 2023, Table 203.40 [24]. The last column compares kindergarten with grade 8 enrollment. California is omitted because its kindergarten count includes transitional kindergarten.

Grade counts are not the same as children of an age. Exhibit 7 shows more students in grade 9 than in grade 8 in every state listed, and fewer in grade 12 than in grade 9 in every state listed except Arizona. A charter high school that plans its ramp from ninth-grade enrollment in its county must allow for students who repeat a grade and students who leave before grade 12.

Private schools and other choices compete for the same students

Families who leave a district school do not all go to charters. In the 2025 American Community Survey, 14.1% of students enrolled in kindergarten through grade 12 nationwide reported attending a private school [25]. The share varies widely by state.

Exhibit 8. Students in kindergarten through grade 12 by type of school, 2025

Source: Census Bureau, American Community Survey 2025 1-year, table B14002, kindergarten through grade 12 by public and private school, both sexes, summed by FSC [25]. ACS figures are survey estimates with margins of error; households report the school type, and some charter families may report a public charter as private.

The study uses NCES and state counts for public enrollment and ACS for the private share and the trade area's age structure.

How does the study build an enrollment ramp by grade?

It builds the ramp the way a school fills: one grade at a time, with a seat limit in each grade and a share of seats filled each year. The study does not start from a headline number such as "450 students by year four." It starts from the school's grade plan, section count and class size, then fills seats from evidence and carries each class forward to the next grade, less the students who leave.

The steps are:

1. Grade plan. Which grades open in year one and which are added each year. A K-5 school that adds a grade a year until grade 8 has a different ramp from a K-8 school that opens all grades at once.
2. Seats. Sections per grade times class size, checked against the building's classrooms and the charter's enrollment cap.
3. Fill rate. The share of seats filled, from applications and lottery results by grade, the school's own history, or comparable schools in the same market.
4. Retention. The share of each grade that returns for the next grade. Each grade's seats are refilled from the waiting list only where the school admits students in that grade.
5. Count conversion. Enrolled students become funded students under the state's count rule: average daily membership in Arizona [11], average daily attendance in Texas [12], full-time equivalent membership in Florida [26].
6. Capture test. The stabilized enrollment is divided by the trade area's children of the same ages. The Arizona model study set its break-even and capacity enrollment against the trade area's K-8 children and compared the result with Arizona's statewide charter share, which state budget data put at 220,226 of 1,052,291 public students in fiscal 2026, or 20.9% [19].

Exhibit 9. An illustrative K-8 enrollment ramp built by grade

Source: FSC model; the inputs are illustrative assumptions (two sections of 25 per grade, the fill rates shown, a 15% enrollment loss at renewal), not market figures. These are the calculator's default inputs.

Three tests catch most weak ramps: a fill rate faster than the school's own lottery history, a capture share higher than comparable schools have reached, and upper grades that fill from outside the school rather than from its own lower grades.

Waiting lists are evidence only when they are clean

A waiting list is strong evidence when it is current, counted by grade, de-duplicated across the schools a family applied to, and produced under the school's published admission rules. Federal law ties the charter definition to a lottery when a school is oversubscribed [8], so the lottery record is a public, auditable document. The study asks for the last three lotteries by grade, the number of offers made, the number accepted and the number of students who enrolled and stayed through the count date. Yield from offer to enrolled student is often the most telling number in the file.

How is per-pupil revenue built, and when does the cash arrive?

The study builds revenue from the state formula, component by component, with the statute for each and the date each payment arrives. The total per student matters, but so does timing: a school that opens in August and is paid on an October count, with revisions in spring, needs working capital the coverage ratio does not show.

Arizona's formula illustrates the pieces. The base level for fiscal 2026-27 is $5,215.53 per weighted student [11]. A weight of 1.158 applies to kindergarten through grade 8 in the basic formula [27]. Charter additional assistance adds $2,174.54 per K-8 student in place of district capital funding [10]. Classroom Site Fund money, paid from a state sales tax and land trust revenue, was estimated at $883 per weighted pupil for fiscal 2027, $41 more than the year before [28]. None of these amounts is guaranteed past the year in which it is set: the legislature can change any of them.

Texas pays an open-enrollment charter its formula funding per student in weighted average daily attendance as if it were a school district "without a tier one local share" [12]. On top of that, Texas law entitles a charter holder to an annual facilities allotment per student in average daily attendance equal to the lesser of a formula tied to the statewide average interest and sinking fund tax rate, or the basic allotment "multiplied by 0.06" [12]. A charter loses that facilities allotment after two consecutive years of unacceptable academic or financial ratings, except in its first two years of operation [12], and must certify each year that no insider "derives any financial benefit from a real estate transaction with the school" [12].

Massachusetts routes money differently. Each sending district pays tuition for its students who attend a charter, and each district's per-pupil tuition must include "a per pupil foundation budget component" and "a per pupil facilities component" [17]. The school's annual report must show how "the capital needs component of the charter school's tuition was spent" [17].

Exhibit 10. Revenue rules a charter school study reads, by state

Source: state statutes as cited in each row.

What districts spend on buildings, for comparison

District spending on buildings is a useful outside check on a charter's occupancy cost, because it is what the public system spends to house the same students. In 2020-21, districts nationally spent $1,331 per pupil on operation and maintenance of plant, $1,609 on capital outlay and $440 on interest on school debt [31]. Together that is $3,380 per pupil on buildings, against total spending of $16,345.

Exhibit 11. District spending per pupil on buildings, 2020-21

Source: NCES, Digest of Education Statistics 2023, Table 236.75, expenditures per pupil in fall enrollment, school year 2020-21 [31]. The last column is the sum of the three building-related columns, computed by FSC. District capital outlay varies widely from year to year with construction cycles.

The comparison frames the charter's facility payment. A charter school in Idaho receiving $400 per student in facilities funds [30], while its district neighbors spend $2,003 per pupil on plant, capital and interest, pays most of its building cost from operating revenue.

Which states help charter schools pay for buildings, and how?

Some states pay a per-pupil facilities allowance, some reimburse leases, some route a facilities component through district tuition, some help with bond financing, and some do nothing specific. The study names the program, quotes the statute, states whether the money depends on an annual appropriation, and runs coverage with and without it.

Exhibit 12. State facility support for charter schools in the statutes reviewed

Source: state statutes as cited in each row.

Federal law adds one more model: a grant that pays a falling share of a state's per-pupil facilities aid for up to five years [33] (Exhibit 21). A state that joins must carry the whole program later, which is a reason to test the allowance's durability.

Leases, related parties and building corporations

Where a charter school leases, sometimes from an affiliated nonprofit that owns the building and borrows against it, states regulate the structure because public money flows through it. Minnesota allows a charter to lease from a related party only if the lessor is a nonprofit or cooperative and the lease cost is reasonable, and if the school later closes, the commissioner "has the right to recover from the related party any lease payments in excess of those that are reasonable" [34]. Minnesota also allows an affiliated nonprofit building corporation to buy, renovate or build a school, but only for a charter that has, among other tests, "operated for at least six consecutive years" [34].

For the lender to the building owner, these rules are credit terms. The lease payment is only as safe as the school's right to keep paying it under state law, and a lease aid program that requires a closure clause, as Minnesota's does, means the lease can end when the charter does [29].

What does the building cost per student?

The study converts the project budget into cost per square foot and per student, then compares both with public benchmarks. Arizona's state school facilities formula is a useful public benchmark because it sets both space and cost per student by grade band. For fiscal 2027 awards, it allows 90 square feet per K-6 student at $358.46 per square foot and 100 square feet per grade 7-8 student at $378.44 [35].

Exhibit 13. Arizona's statutory school facilities funding guidelines, fiscal 2027 awards

Source: Joint Legislative Budget Committee, Fiscal Year 2027 Appropriations Report, School Facilities Division [35]. These are district new-construction guidelines, not a charter school rule; they are used here as a public benchmark.

Exhibit 14. A 450-student K-8 building at the Arizona guideline (illustration)

Source: FSC computation from the guidelines in Exhibit 13 [35] and Arizona charter additional assistance [10]. The enrollment, rate and term are illustrative assumptions, not market figures; land, site work, furniture and financing costs are excluded.

This result is the central problem in a charter facility file. At a public-standard size and cost, and fully financed at an illustrative 6% for 30 years, the building's debt service alone exceeds the state's per-student charter assistance before land, site work or a reserve. The study then tests the levers: equity or grants, a smaller or phased building, a lease, a longer term where the program allows it, or a lower rate through a credit enhancement program.

Idaho's statute gives a lender-style ceiling for the same question. To join the state's bond program, a school must show that "the cost to operate the proposed facility, including future debt service, future occupancy cost, and facility operating expenses, will not exceed twenty percent (20%) of ongoing revenues" [13]. A study can apply the same test in any state as a measure of affordability, labeled as a benchmark rather than a rule.

How do charter term, renewal and closure rules shape the loan?

They set how long the revenue can last and what a lender recovers if it stops. The study reads the charter contract, the state's term and renewal statute, the authorizer's performance framework and its renewal history, then compares the charter's remaining term with the loan's term.

Exhibit 15. Charter terms and renewals in the statutes reviewed

Source: state statutes as cited in each row.

Two cases show why the term matters to a lender. A thirty-year loan to a Minnesota charter school must survive five or six renewals of up to five years each [5]; a twenty-five-year loan to an Arizona school whose fifteen-year charter has eight years left must survive one twenty-year renewal [4]. The probability of renewal is not a number a statute supplies, so the study does not invent one. It reads the evidence the authorizer will read, states whether the school meets its framework today, and shows coverage in a renewal stress case.

What happens to the building if the school closes

Closure rules decide whether the building is a lender's collateral or a public asset. Texas is the clearest example: property purchased with state funds received under its charter funding section "is considered to be public property for all purposes under state law" and is "property of this state held in trust by the charter holder" [12]. After a charter expires without renewal or is revoked, the holder may not sell or transfer that property without the agency's prior written consent [12].

Exhibit 16. Closure, reversion and related-party rules that affect collateral

Source: state statutes as cited in each row.

What site and building rules does the study check?

The study checks zoning, building code, occupancy timing and any right to use public buildings, because each one can delay opening, and a late opening means a year of debt service without a year of students. State law often treats a charter like a district school for zoning, but not always.

Exhibit 17. Site, zoning and building rules in the statutes reviewed

Source: state statutes as cited in each row.

Arizona's zoning provision is worth reading in full: charter schools "shall be classified the same as public schools that are operated by a school district for the purposes of zoning" [45]. In states without such a rule, a school may need a special use permit, and the study treats the permit as a condition of feasibility, not an assumption.

Which capital sources finance charter school buildings?

Charter school buildings are commonly financed through five routes: a USDA Community Facilities loan or guarantee in rural places, tax-exempt bonds issued for a 501(c)(3) borrower, a bank or community development lender loan, often supported by a federal credit enhancement grantee, a state program, or a lease from a developer or an affiliated nonprofit that borrows on the school's behalf. Each route reads the same feasibility study through its own rules. For how lenders and agencies set their study requirements generally, see lender feasibility study requirements.

Exhibit 18. Capital sources for charter school facilities and the rule that decides each

Source: statutes, regulations and SBA SOP as cited in each row.

USDA Community Facilities: direct loans and guarantees

USDA's Community Facilities program is built for rural community facilities, and a charter school can fit it, because an essential community facility under the guaranteed loan rule may include "education" facilities and must be "operated on a non-profit basis" [7]. The direct loan rule allows loans to a public body or to "an organization operated on a not-for-profit basis" [9]. Two population limits apply. Direct loans "will not be made to a city or town with a population in excess of 20,000 inhabitants according to the most recent decennial Census" [9]. The guaranteed loan rule defines rural as outside any city or town of more than 50,000 and its adjacent urbanized area [7].

Since only 12.0% of charter schools are rural by the NCES locale definition [22], the USDA location test rules out a large part of the sector. The study checks the location first, using the decennial census, and reports the result. See USDA loan programs for how the program works.

Exhibit 19. USDA Community Facilities direct and guaranteed loans compared

Source: 7 CFR Part 1942 (revised as of January 1, 2025) and 7 CFR Part 5001 (revised as of January 1, 2026) via GovInfo; USDA fiscal 2026 OneRD fee notice, 91 FR 11272.

The direct loan rule's start-up provisions suit a school's ramp. Interest during the period before a facility is self-supporting, up to three years [9], can carry a building through the first grades of a K-8 build-out. The Arizona model study shows how the population tests, the rate tiers and the reserve rule apply to one rural school.

Tax-exempt bonds for 501(c)(3) borrowers

A charter school organized as a 501(c)(3) nonprofit can borrow through a conduit issuer with tax-exempt bonds, and the Internal Revenue Code sets rules the study's facts must fit. All property financed with the net proceeds must be "owned by a 501(c)(3) organization or a governmental unit" [16], so a building owned by a for-profit landlord and leased to the school does not qualify. The private business test is applied at 5% rather than 10% [16][49]. The average maturity of the bonds may not exceed "120 percent of the average reasonably expected economic life of the facilities being financed" [47], and issuance costs financed by the bonds may not exceed 2% of proceeds [47].

Exhibit 20. Bond rules and state program tests a charter school financing must meet

Source: 26 U.S.C. 145 and 147 (2024 edition); 26 CFR 1.145-2 (revised as of April 1, 2025); Idaho Code 33-5218.

Federal credit enhancement and per-pupil facilities aid

Federal charter school facilities money does not lend to schools directly. Under 20 U.S.C. 7221c, the Department of Education makes competitive grants to public or nonprofit entities that deposit the money in a reserve account and use it for guaranteeing, "insuring, and reinsuring bonds, notes, evidences of debt, loans" and leases that finance charter school facilities [33]. The statute is explicit that the "full faith and credit of the United States is not pledged" to any of those obligations [33], and the program rule bars grantees from using reserve funds to directly "pay for a charter school's construction, renovation, repair, or acquisition" [50].

Exhibit 21. Federal charter school facilities programs

Source: 20 U.S.C. 7221c (2024 edition); 34 CFR Parts 225 and 226 (revised as of July 1, 2025); Federal Register notices of May 16, 2025 (90 FR 21016) and May 9, 2025 (90 FR 19689).

For the study, the practical point is that a credit enhancement grantee is a second reader of the file. Its reserve sits behind the lender's loan, so it asks the same questions about enrollment, renewal and coverage, and it may require its own reporting.

Can a charter school use an SBA 7(a) or 504 loan?

No, not if the borrower is a nonprofit. SBA's regulation lists "Non-profit businesses (for-profit subsidiaries are eligible)" first among businesses ineligible for SBA business loans [15], and SOP 50 10 8.1 says plainly that "Non-profit businesses are not eligible for SBA business loan assistance" [48]. The rule is the same for 7(a) and 504. For the program details, see SBA loan programs and the SOP 50 10 8.1 update.

Exhibit 22. SBA eligibility applied to common charter school structures

Source: 13 CFR 120.110 and 120.111 (revised as of January 1, 2026); SBA SOP 50 10 8.1.

How does the study test coverage and the renewal stress case?

It projects cash available for debt service year by year through the ramp and the renewal, divides it by debt service, and shows the enrollment at which coverage falls to the lender's threshold. Coverage in a charter school study is rarely a single number: it is low during the grade build-out, highest once all grades are open and full, and at risk in the year the charter renews. For how coverage is defined and measured by program, see debt service coverage for SBA and USDA loans.

The study runs at least four cases: the school's own plan; a slower ramp; a lower per-pupil revenue path, for example no growth in the state base level; and a renewal stress case in which enrollment drops in the renewal year, or the charter is not renewed. It reports the reserve needed to carry the ramp, the stabilized coverage, the coverage after the renewal shock and the break-even enrollment.

The calculator below applies that method to a K-8 school that opens with some grades and adds one each year.

The calculator tests the core feasibility question for a charter school building: whether enrollment, built grade by grade, earns enough per-pupil revenue to pay operating costs and debt service, and what happens to coverage if enrollment falls when the charter comes up for renewal. It takes the grades at opening and at full build-out, seats per grade, the share of seats filled each year, per-pupil revenue and its growth, fixed and per-student costs and their growth, project cost, equity, interest rate and term, the renewal year, the enrollment loss at renewal and a target coverage. It returns enrollment, revenue, cash available for debt service, coverage, debt service per student and as a share of revenue, the ramp shortfall and the break-even enrollment. Every input is illustrative and no default is a market figure; the result shows how the pieces interact and is not a feasibility conclusion for any school.

Exhibit 23. The calculator's default case: plan versus renewal stress

Source: FSC model output from the calculator's illustrative default inputs: per-pupil revenue of $11,500 growing 2% a year; fixed costs of $1,000,000 and $6,000 per student growing 2.5%; a $15,000,000 project with $1,500,000 of equity; a $13,500,000 loan at 6% for 30 years ($971,272 a year); a 15% enrollment loss from year 5. These are not market figures.

Three readings follow. The ramp leaves a cash shortfall of about $928,904 against debt service in years 1 and 2, which a reserve, capitalized interest or a phased building must cover. Coverage after the build-out looks comfortable at 1.42 to 1.47. And a 15% enrollment loss at renewal cuts coverage to about 1.05, below the 1.2 that Idaho's bond program requires [13], while debt service rises from 18.2% to 21.4% of revenue, above that program's 20% test for all facility costs. Under these inputs the break-even enrollment for coverage of 1.20 in year 5 is 390 students, 38 fewer than the plan.

What risks does the study test?

The study tests each of these risks against evidence:

1. Enrollment shortfall: weak applications, low yield from offers, or upper-grade attrition.
2. Charter nonrenewal or revocation: the authorizer's framework, the school's results and the renewal statute (Exhibit 15).
3. Funding change: a formula or appropriation cut, or loss of a ratings-based facility payment, as in Texas [12].
4. Count timing: revenue paid on counts taken after the year begins [10][26] creates a working capital need.
5. Competition: new charters, district programs, private schools (Exhibit 8) and state-funded private choice.
6. Construction and permits: zoning, code and occupancy timing (Exhibit 17).
7. Collateral limits: public property and reversion rules (Exhibit 16).
8. Related parties: affiliate leases and insider transactions, which some states restrict [34][12].

What must a charter school feasibility study contain?

A complete study gives the lender everything it needs to repeat the analysis. It contains:

1. A summary of the conclusion and its conditions.
2. The project: grades, enrollment plan, building program, budget and financing.
3. The charter: authorizer, term, renewal date, performance framework results and any conditions.
4. The state rules: funding formula, facility payments, count dates, term and renewal, closure and property rules, each with its statute.
5. The trade area: children by age from Census data, public and private enrollment, and charter share.
6. Competition: existing and approved schools, their grades, enrollment and capacity.
7. Demand evidence: applications, lottery results, offers, yield and waiting lists by grade.
8. The enrollment ramp by grade with retention and the capture test.
9. Revenue by component and year, with payment timing.
10. Operating expenses: staffing plan by grade and section, occupancy and other costs.
11. The building: size per student, cost per square foot and per student, against public benchmarks.
12. Coverage by year at the program's threshold, with the ramp, slower-ramp, revenue and renewal stress cases.
13. Program eligibility for each capital source considered.
14. A management and governance assessment.
15. Every source and assumption listed, with model outputs labeled as such.

What documents does the study need?

For an operating school: the charter contract and amendments, the last three authorizer reviews or performance reports, three years of audited financial statements, the current budget, enrollment by grade on each count date for three years, the last three lotteries by grade with offers and acceptances, the waiting list by grade, the staffing plan, any management agreement, and the lease or purchase documents for the building. For a new school, the approved charter application, the authorizer's approval letter and conditions, the founding board and leader's experience, any pre-enrollment data, the site plan and budget, and the financing term sheet.

How the study runs

1. Scoping: confirm the capital source, program, loan or bond size and the tests that apply, including USDA rural status, 501(c)(3) bond rules or a credit enhancement grantee's requirements.
2. Document intake: the charter, authorizer reports, financial statements, enrollment and lottery records, building plans and budget.
3. Research: the state's funding, term, closure and facility statutes; Census and NCES data for the trade area; the competitive survey.
4. Model: the enrollment ramp by grade, revenue by component, expenses, coverage and reserves, with the plan and stress cases.
5. Review: the draft is checked against the lender's questions and revised only for new facts.
6. Final report: signed by Sarrah Allen, MAI, with written answers to the lender's follow-up questions. More about the practice is on the about page.

Cost and timeline

Scope sets the cost and the schedule. The main drivers are whether the school is operating or new (a new school has no enrollment history, so the demand work is heavier), the number of states and authorizers involved, whether the financing is a bank loan, a USDA loan or a bond issue with its own disclosure needs, and how quickly the school can supply its charter, lottery and financial records. The deliverable is the same in every case: a written report with the model, the sources and the stress cases, and a final version that answers the lender's or bond buyer's written questions. Fees are quoted after scoping. Other asset types are listed on the asset classes page.

A worked example

The K-8 charter school model study in rural Arizona applies this method to one school financed under USDA Community Facilities: the town and urban area population tests, a ZIP code trade area from Census files, Arizona's base level, weights and charter additional assistance, the state's school facilities guidelines as a cost check, and coverage at the direct loan's rate tiers.

Download the evidence behind this page's exhibits (CSV, 988 data points with sources)