Can Assisted Living Facilities Use SBA 504 Loans?

Using SBA 504 Loans for Assisted Living Facilities

Yes, assisted living facilities can make use of SBA 504 loans. In fact, these facilities are a prime example of an almost perfect fit. The demand for assisted living, memory care, and other age-related care facilities is growing exponentially as Baby Boomers age out. In fact, total revenue for the sector is expected to reach $69 billion in 2018, and the segment has grown 3.6% since 2013.

So, whether you are planning a new facility, or you want to expand your current one, an SBA 504 loan can give you up to $5 million in funds for use to purchase real estate, pay for construction, or purchase equipment needed to care for residents in some way.

504 Loans Are Also Available to Other Types of Senior Care Businesses

In addition to assisted living facilities, SBA 504 loans are also available to a variety of other businesses in involved in caring for seniors, including:

  • Nursing homes and skilled nursing centers

  • Board and care facilities and residential group homes

  • Continuum-of-care facilities (in some circumstances)

  • Rehab and intermediate care facilities geared toward senior citizens

  • Adult daycare facilities for seniors

In general, independent living facilities are not eligible for SBA 504 loans, as these are considered more in the vein of passive real estate than an actively managed business. This is because they generally consist of age-restricted apartment communities with no common eating areas or healthcare services offered. Continuum-of-care facilities will likely need to be assessed on a case-by-case basis, as they typically consist of a certain amount of independent living facilities, along with a number of assisted living and skilled nursing units.

More Funds Are Available to Borrowers Utilizing the SBA 504 Green Program

It should be noted that the SBA offers access to additional funding (up to $16.5 million in lifetime funds) for those assisted living facilities interested in reducing their carbon footprint and becoming more environmentally friendly through the organization’s “go green” program. To be eligible for tis program, a borrower needs to cut their building’s energy use by 10%, acquire a new building that uses 10% less energy, or replace 10% of their building’s current energy usage with alternative energy, such as wind, solar, or geothermal power.

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