SBA loans for skilled nursing facilities: large loans, long terms and a government payer

Real estate loans with a health-care operator inside

Nursing care facilities (NAICS 623110) provide inpatient nursing and rehabilitation to residents who need continuous care: skilled nursing facilities, rehab centers and long-term care homes. The SBA figures show an industry that borrows like a property owner. The median loan was $691,250, the middle half ran from $202,750 to $1,657,875, and 50 loans, 37.9%, were $1 million or more. The median term was 240 months.

A 20-year median term is a blend. SBA allows up to 25 years on real estate and up to 10 on goodwill, equipment and working capital, and a loan that funds both gets a maturity weighted between them; see SBA blended maturity. Most of these loans include a building, or a substantial improvement to one.

The median rate was 9.75%, with the middle half from 8.75% to 10.81%. Large loans sit in SBA's lowest rate-cap band, base rate plus 3% above $350,000, and most carry real estate, which helps keep pricing under the national median. Only 15.2% of loans were fixed-rate, and only 14.4% went through SBA Express, which stops at $500,000. The median loan supported 11 jobs; facilities are staffed around the clock.

Reimbursement: who actually pays

Most of a nursing home's revenue comes from government programs. Medicare pays for short-term skilled and rehab stays after a hospital discharge, at higher daily rates. Medicaid pays for long-term residents, at rates set by each state, often lower. Managed-care plans, private-pay residents and hospice arrangements make up the rest. The mix is the first thing an underwriter looks at, because it sets both the margin and the risk.

• Payer mix. A facility with a strong short-stay rehab business earns more per day but depends on hospital referral relationships. A facility that is mostly long-term Medicaid residents is steadier but thinner, and exposed to state rate decisions.
• Occupancy. Fixed costs are high, so a few empty beds move cash flow sharply. Lenders ask for census by month and by payer for at least two years.
• Receivables. Government payers pay reliably but on their own schedule, claims can be denied or recouped after audit, and federal rules limit a lender's ability to take Medicare and Medicaid receivables directly, so lenders usually rely on control of the deposit account instead. Lenders look at how old the receivables are and whether any payer has a repayment claim outstanding.

Show census by payer by month. A single annual occupancy figure hides the thing a lender most needs to see.

The operating risks lenders check

Beyond the numbers, a nursing home's ability to repay depends on staying licensed, certified and staffed. Underwriters read these as seriously as the P&L.

Lenders treat a nursing facility as special-purpose property, which lowers the value they give it as collateral and, on SBA 504, raises the borrower's share of the project from 10% to 15%, or 20% for a new business. With 61 SBA 504 loans at a median of $1,106,000, 504 is a common route for the building here, set against 132 7(a) approvals; see SBA 7(a) vs 504.

When the facility is bigger than SBA

The 90th percentile loan was $3,398,100. 7(a) loans stop at $5 million, the size at which SBA's guaranty reaches its $3.75 million cap per borrower, so the largest tenth of these loans is already well along the way to the limit. Many nursing facilities, bought with their buildings, cost more than that. The usual answers:

• Pair 7(a) with 504. The CDC's share of a 504 goes up to $5 million, and since July 2026 the 504 and 7(a) limits are counted separately, so the building and the operating business can be financed through different programs.
• Separate the property from the operator. A property-holding company owns the real estate and leases it to the operating company. SBA allows this through an eligible passive company, with the operator as co-borrower or guarantor. See eligible passive company and PropCo and OpCo structures.
• Go outside SBA. Larger facilities often use conventional bank debt, government-insured mortgage programs or private credit for the real estate. Conventional bank lenders commonly look for debt service coverage of at least 1.25x. See financing acquisitions above the SBA limit.

Buying a nursing facility

Acquisitions were 30 of the 132 loans, 22.7%, more than double the national share of 10.4%. The median acquisition loan was $1,148,500 at a median rate of 9%, below the industry's 9.75%, which fits loans large enough to sit in the lowest rate-cap band.

A purchase is also a regulatory event. The buyer must obtain a state license and, for Medicare, either accept assignment of the seller's provider agreement, taking on its history and any repayment liabilities, or apply for a new one and risk a gap in billing. Medicaid follows state rules. The lender will want the change-of-ownership filings on a timeline that fits closing, and the purchase agreement should allocate liability for the seller's pre-closing claims; see escrow and holdbacks.

• The buyer injects at least 10% of total project costs. A seller note counts toward up to half of that only on full standby for the life of the SBA loan; SBA prohibits an earnout to the seller.
• SBA requires an independent business valuation when the amount financed, less appraised real estate and equipment, exceeds $250,000, and the loan cannot exceed it.
• From 1 October 2026 (SOP 50 10 8.1), every change of ownership requires financial due diligence, a quality of earnings report is required on acquisitions of $3 million or more excluding real estate, and the deal must show 1.25x debt service coverage on historical results.
• From the same date, change-of-ownership loans amortize over no more than 10 years except the real estate share. On a facility bought with its building, the split between real estate and goodwill now shapes the payment.
• The seller cannot stay as an owner, officer or employee, but may consult for up to 12 months, or up to 24 months under SOP 50 10 8.1 from 1 October 2026.

See acquisitions with real estate and financing an assisted living acquisition, which shares much of the same logic with less regulation.

Preparing a nursing facility file

Start from Transparent's SBA checklist: 2–3 years of business tax returns, P&L, balance sheet, a year-to-date P&L, a debt schedule with notes being refinanced, and personal tax returns and a personal financial statement for each 20%+ owner, all of whom guarantee. For an acquisition, the target's latest full year of figures and the letter of intent. Then add what a health-care lender reads: census by payer by month, the most recent survey results and plans of correction, current licenses and certifications, a staffing summary and the resumes of the administrator and director of nursing.

Transparent builds the full lender package — financing model, lender presentation, blind teaser and underwriting memo — in a day once documents are in. With 278 lenders in the book writing SBA 7(a) and 504, and 1,148 writing term and private credit, a facility too large for SBA alone can be shown to both at once.