SBA loans for assisted living facilities: real estate loans with a care business inside

What the figures say: big loans, long terms

Assisted living facilities for the elderly (NAICS 623312) provide housing, meals, help with daily living and supervision to older residents who do not need skilled nursing. From FY2024 through June 2026, 149 lenders approved 622 SBA 7(a) loans to them, worth $718,629,300. The median loan supported 10 jobs, because care is staffed around the clock.

Almost every figure points the same way. A median term of 300 months is the 25-year maximum SBA allows for real estate, so the typical loan buys, builds or refinances a building. The median of $750,000 is about five times the national median, and 244 loans, 39.2%, were $1 million or more. Only 13.8% went through SBA Express, which stops at $500,000.

Two kinds of facility in one code

The middle half of loans runs from $160,000 to $1,550,975, and that spread reflects two different businesses a lender underwrites differently.

• Residential care homes. A converted single-family house licensed for a small number of residents, often run by an owner who is also a caregiver or nurse. The real estate is a house with a residential value, which makes it easier to appraise and to resell. The risk is concentration: with few beds, one or two vacancies move cash flow sharply, and the business depends heavily on its owner.
• Purpose-built facilities. Larger buildings with private units, common dining, and staff on every shift. The cash flow is steadier because it rests on more residents, but the building has limited use outside care. A lender or CDC may treat it as special-purpose property, which lowers the value it will give the building as collateral and, on a 504, raises the borrower's contribution.

Start-ups make up 23.3% of loans. Some are new purpose-built facilities; others are an operator buying and converting a house, licensing it and filling it. A start-up needs an equity injection of at least 10% of total project costs on a 7(a), and the lender will want a realistic lease-up plan and enough working capital to carry the home until it is full. The operator's experience in care, not just in business, weighs heavily.

The building: 7(a) for 25 years, or 504

7(a) maturities run up to 25 years for real estate, which is how a facility that is mostly building gets a payment it can carry. The alternative is SBA 504, and assisted living uses it heavily: 158 504 loans in the period at a median of $1,011,000. A 504 typically puts 50% with a bank, 40% with the CDC and 10% with the borrower, rising to 15% for a new business or special-purpose property and 20% for both. A new operator building a purpose-built facility can be both. The CDC's share goes up to $5 million, and since July 2026 the 504 and 7(a) limits are counted separately, so a project can use each. See SBA 7(a) vs 504 and 504 vs a conventional mortgage.

Occupancy is rarely an issue for an operator in its own building: a 504 borrower must occupy at least 51% of an existing building, or 60% of new construction, and a care facility occupies all of it. The structure question is who owns it. Many operators hold the real estate in a separate company that leases it to the operating company. SBA allows this through an eligible passive company, with the operating company as co-borrower or guarantor. See eligible passive companies and holding real estate separately.

The building secures an assisted living loan, but a lender sizes it on the residents: a full facility repays, an empty one does not, and special-purpose buildings sell poorly empty.

What an underwriter reads in a care business

Cash flow is then tested against SBA's minimum of 1.15x debt service coverage, and 1.0x globally including the owners' personal obligations. For a start-up, the test runs on projections, and lenders read them against the census plan. For an existing facility, the test runs on the tax returns, and a facility whose occupancy dipped in the last year will have to explain it. See debt service coverage and global cash flow.

Buying an assisted living facility

Acquisitions made up 19.5% of loans, 121 of them, nearly twice the national 10.4%, at a median of $1,044,000 and a median rate of 9.5%. The license is the first issue. A state license generally does not transfer with the business; the buyer applies for a change of ownership, and the lender conditions the loan on approval. A buyer should know the state's process and timing before signing a purchase agreement.

The SBA acquisition rules apply in full: at least 10% equity for a complete change of ownership; a seller note counting toward up to half of it only on full standby for the life of the loan; no earnout; and an independent business valuation where the amount financed, less appraised real estate and equipment, exceeds $250,000. Real estate is appraised separately. From 1 October 2026, under SOP 50 10 8.1, every change of ownership needs financial due diligence and must show 1.25x coverage on historical results, and a quality of earnings report is required where the purchase is $3 million or more excluding real estate. Change-of-ownership loans then amortize over no more than 10 years except the real estate share. See financing an assisted living facility acquisition and buying a business with its real estate.

The largest facilities outgrow the program. 7(a) loans go up to $5 million, with SBA's guaranty to one borrower capped at $3.75 million; the industry's 90th percentile is $2,998,000, so a tenth of loans already sit near the top of that range, and an operator's other SBA loans, including those of affiliated facilities, count against the same guaranty cap. Larger purchases combine a 504 for the building with a 7(a) for the business, or move to conventional and private lenders. See financing acquisitions above the SBA limit.

Preparing an assisted living SBA file

Begin with SBA's standard list: business tax returns for 2–3 years, a P&L and balance sheet with a year-to-date P&L, a debt schedule with copies of notes being refinanced, and personal tax returns and a personal financial statement for each owner of 20% or more, each of whom guarantees the loan. For a purchase, add the facility's latest full year of figures and the letter of intent. Then add what is particular to care:

• Monthly census reports, with private-pay and Medicaid residents shown separately
• The state license, the most recent inspection report and any plan of correction
• A staffing schedule and a summary of agency labor costs
• Current resident rates and a sample resident agreement
• Professional and general liability insurance certificates
• For a start-up or expansion: construction or conversion budget, licensing timeline and a month-by-month lease-up plan

Transparent builds the full lender package — financing model, lender presentation, blind teaser and underwriting memo — in a day once the documents are in, and places it with the lenders in its book that write SBA 7(a) and 504, 278 of them. Only 149 lenders approved an assisted living 7(a) in the period, and knowing which of them understand care is much of the work. On SBA loans the lender pays Transparent, not the borrower.