SBA 7a

0–10% Down Payment

~$9M Max (structured)

Fixed or Variable Rate

Up to 25-Year Term

SBA 504

15–20% Down Payment

$20M+ Project Capacity

Fixed Rate (SBA portion)

25-30 Year Term

Last Updated: May 2026

SBA loans are the most flexible and highest-leverage financing available for assisted living facilities, senior care businesses, nursing homes, memory care, and residential care homes. The SBA 7a program can finance the purchase of a business, the real estate, ground-up construction, refinancing, expansion, and partner buyouts — often with little or no money down for experienced operators. The SBA 504 program offers long-term fixed-rate financing for real estate and equipment, with project sizes reaching $20 million or more. Both programs cover a wide spectrum of senior care property types, from large institutional assisted living facilities to small residential board and care homes.

This page was reviewed by Green Commercial Capital's SBA lending team and updated for current SBA assisted living financing guidelines.

What Types of Assisted Living and Senior Care Facilities Are Eligible?

SBA loans are available for a broad spectrum of licensed senior care and assisted living businesses. The key eligibility requirement is that the facility must be licensed and must provide healthcare or medical services to residents. Assistance with Activities of Daily Living (ADLs) — such as medication management, bathing assistance, or transportation to medical appointments — meets this requirement under current SBA rules.

Which SBA Financing Option Is Right for My Situation?

Borrower Situation	Best Fit	Why
Acquiring an existing licensed ALF with real estate	SBA 7a	Finances business + real estate together in one loan; 10% down. 504 can finance the real estate portion only — business/goodwill value requires either a companion 7a or seller financing
Acquiring an existing ALF — business only, leased space	SBA 7a	7a can finance business-only acquisitions without real estate
Experienced operator, additional locations	SBA 7a	100% financing available; no down payment required
Ground-up construction under $7M	SBA 7a	Single close; ramp-up reserves financed in; short prepayment penalty
Larger acquisition or construction over $10M	SBA 504	Larger loan capacity; fixed rate on SBA second mortgage portion
Startup — no existing facility, licensed operator	SBA 7a	Startups eligible; business plan and projections required
Partner buyout in existing ALF	SBA 7a	Standard eligible use of proceeds
Seller willing to hold a note on full standby	SBA 7a or 504	7a: buyer's cash drops to 5% with seller holding at least 5% on full standby. 504: seller can cover up to half the required down payment; borrower contributes the other half
Small residential care home or board and care (6–10 beds)	SBA 7a	Business and real estate both eligible; no minimum facility size

What SBA Assisted Living Loans Can Be Used For

Both SBA programs support a wide range of transaction types for assisted living and senior care businesses:

• Business acquisition — purchasing an existing licensed ALF, memory care, or care home (business + real estate, or business only)
• Real estate acquisition — purchasing the building or property separately from the business
• Ground-up construction — land purchase, site work, construction costs, and all soft costs
• Renovation and conversion — converting an existing building to a licensed care facility
• Expansion — adding beds, building a new wing, or opening additional locations
• Startup — financing a new facility when the borrower has relevant licensure or healthcare experience
• Refinance — rate and term refinance of existing conventional or SBA debt. See: SBA 504 Refinance
• Partner buyout — buying out a co-owner's interest. See: SBA Partner Buyout
• Working capital — funding staffing, licensing costs, and pre-opening expenses alongside real estate financing
• Equipment — medical equipment, lifts, beds, and other capital items can be financed alongside real estate

Down Payment Requirements for Assisted Living SBA Loans

SBA 7a Loans for Assisted Living — Full Detail

Why the 7a Is Usually the Right Program for Assisted Living Acquisitions

Most assisted living transactions involve both a business component (licenses, goodwill, equipment, staff relationships, patient census) and a real estate component (the building and land). The SBA 7a is the only program that can finance both in a single loan. This is critical because the value of a care home is not purely in its real estate — a significant portion of the purchase price typically reflects the operating business, the license, and the going-concern value of an active census.

A conventional commercial real estate loan can only finance the real estate. A business acquisition loan can only finance the business. The SBA 7a can do both together in one closing, which eliminates the need for two separate loans, two separate lenders, and two separate sets of closing costs.

Key SBA 7a program characteristics for assisted living:

• Loan term: Up to 25 years if real estate accounts for more than half of total financing; 10 years for business-only acquisitions
• Amortization: Fully amortizing — no balloon payment
• Rate: Variable or fixed; variable typically tied to Prime Rate; well-qualified borrowers often price at Prime flat to Prime + 1.5%
• Prepayment penalty: 5%/3%/1% over 3 years — only applies to loans with terms over 15 years
• Single-close construction: Land acquisition, construction, permanent financing, working capital, and ramp-up reserves — all in one loan
• No financial covenants: Once closed, no ongoing DSCR maintenance tests, no minimum liquidity requirements

How Large Can an SBA 7a Assisted Living Loan Get?

The SBA 7a program has a $5 million loan limit. For stronger borrowers, lenders can layer an unguaranteed second mortgage behind the $5 million 7a first mortgage, pushing total financing to $7 million or even $9 million on larger transactions. Above that level, the SBA 504 is typically the better structure.

SBA 504 Loans for Assisted Living — Full Detail

How the 504 Is Structured

The SBA 504 program uses a split structure: a conventional first mortgage (typically 50%–60% of project cost) paired with a fixed-rate second mortgage funded by an SBA-approved second mortgage lender for 30% to 40% of the project costs, leaving the borrower to contribute 15% to 20%. For new construction, startups, or facilities with limited operating history, 20% is standard.

The fixed rate on the SBA-approved second mortgage portion is the defining advantage of the 504. For a long-term hold on a large assisted living or memory care facility, locking in a below-market fixed rate on 30% to 40% of a $10M+ project is a meaningful cost advantage over the life of the loan.

Key limitations to understand: the 504 only finances real estate and equipment — it cannot finance the business component of a care home acquisition (the going-concern value, goodwill, licenses). For transactions where business value is significant, a companion SBA 7a loan or a two-loan structure may be needed.

504 vs. 7a for Assisted Living — When Each Makes Sense

Factor	SBA 7a	SBA 504
Business + real estate together	Yes — single loan	No — real estate only; needs companion 7a for business value
Best loan size	Up to $7–$9M	$1M–$20M+
Construction	Single-close, ramp-up reserves	2 closings, more complex
Rate structure	Variable or fixed	Fixed rate on SBA second mortgage portion
First-time operators	10% down	20% down
Experienced operators	0% down expansion possible	15% down, 85% LTV
Long-term hold, large deal	Good	Better — fixed rate advantage

SBA Assisted Living Construction Loans

Ground-Up Construction

A first-time developer of a licensed care facility can finance up to 90% of total project cost through the SBA 7a program. Total project cost includes land, site prep, construction, all soft costs, architectural and engineering fees, permits, construction interest reserves, contingency, and ramp-up working capital — not just the hard construction budget.

What gets financed in a well-structured SBA 7a care facility construction loan:

• Land purchase price (if not already owned)
• All hard construction costs
• 10% construction contingency
• Architect, engineering, permit, licensing, and inspection fees
• State licensing application costs and regulatory compliance expenses
• All closing costs
• Construction period interest (so the borrower makes no payments during construction)
• Ramp-up working capital — to fund debt service for 12–24 months post-opening while census builds

For assisted living construction specifically, ramp-up reserves are critical. A new facility does not open at full occupancy — census builds over 12–24 months. The ability to finance that ramp-up period directly into the loan means the borrower is not required to service the debt out of pocket before the facility becomes cash-flow positive.

Conversion Projects

Converting an existing building — a residential home, small hotel, commercial building — into a licensed care facility is a transaction type SBA lenders will consider. The key underwriting factors are the as-converted appraised value, the conversion and licensure cost, and the borrower's operational plan and state licensing timeline. 90% financing is available; 100% is possible for experienced operators using the 7a.

Real Dollar Example: Assisted Living Facility Acquisition + Business

Startups and New Operator Eligibility

The SBA 7a program is available to startups — including new licensed care facilities with no operating history. Startup financing is very much available for those with and without direct industry experience.

What lenders evaluate for a startup assisted living or care home:

• Borrower's professional background — nursing, healthcare administration, social work, or related field can really help, but it is not required.
• Existing state licensure or documented progress toward licensure
• Detailed business plan with realistic census projections, staffing plan, and revenue model
• Strong personal financial position — borrowers need to have some of their own skin in the game/enough cash down to get lenders comfortable and they need "reserves," but how much is judged on a case by case basis.
• Credit history and demonstrated business management capability
• Down payment of 10%–20% depending on the lender and transaction structure

Do You Need Prior Senior Care Experience to Qualify?

Prior assisted living ownership or management experience is not a universal requirement for SBA financing. What lenders evaluate is whether the borrower has the professional background, business acumen, and financial capacity to successfully operate a licensed care business at the scale being requested.

Factors that strengthen the case for a borrower without direct care home ownership experience:

• Healthcare or nursing background (RN, LVN, CNO, healthcare administrator)
• Business ownership experience in any field
• Active state licensure as a care facility administrator
• Partnership with an experienced administrator or management company
• Acquisition of a stabilized, staffed, cash-flowing facility
• Strong personal financial position and credit history

Experienced operators buying additional facilities are in a much stronger position and can access 100% financing as described above.

No Financial Covenants — A Key Advantage Over Conventional Lending

SBA loans do not have financial covenants — a meaningful difference from conventional commercial lending that is frequently overlooked in assisted living financing.

A conventional commercial loan for a care facility typically includes minimum DSCR maintenance covenants, minimum liquidity tests, and annual recertification of financial performance. A borrower who falls below a covenant threshold is technically in default even if making every payment on time — which can happen during census fluctuations, temporary staffing shortages, or a state survey cycle.

SBA loans have none of this. Once an SBA loan closes on its original terms, those terms govern for the life of the loan — no annual financial tests, no DSCR maintenance covenants, no distribution restrictions. For an assisted living operator managing the natural variability of a healthcare business, this is meaningful protection a conventional loan would not provide.

Residential Care Home and Small Facility Financing

Residential care homes — small-scale licensed care facilities typically operating in residential buildings with 4–10 beds — are eligible for SBA financing under the same program rules as larger institutional assisted living facilities. There is no minimum facility size requirement.

Common small-facility transaction types:

• Purchasing a licensed board and care or RCFE business — operating in a residential home the owner will also purchase or already owns
• Acquiring an existing residential home and converting it to a licensed care facility
• Expanding from one residential care home to two or three — accessing 100% expansion financing
• Purchasing the business from a retiring owner while assuming or refinancing the real estate

Assisted Living Financing Rates — What to Expect

SBA 7a rates vary by lender and borrower profile. Well-qualified borrowers with strong transactions typically price in the Prime + 0 to Prime + 1.5% range and may also qualify for long-term fixed rates. Harder transactions — thinner reserves, weaker credit, startup — typically price at Prime + 2% to Prime + 3%.

SBA 504 rates offer a fixed rate on the SBA second mortgage portion set at closing. For borrowers planning a 10+ year hold on a larger care facility, this fixed-rate certainty is frequently more valuable than the marginally higher leverage available through the 7a.

For current rate context, the Prime Rate is published daily by the Federal Reserve's H.15 statistical release.

What Lenders Look for in an Assisted Living Borrower

Credit and Financial Requirements

• Credit scores are evaluated — approximately 640+ is generally preferred, but there is no SBA program minimum credit score requirement above $350K
• Clean recent credit history matters more than the score itself
• Any prior bankruptcies or significant derogatory history generally needs to be older, isolated, and explainable
• Manageable personal debt obligations relative to income
• Sufficient liquidity after closing — lenders want to see reserves beyond just the down payment

Financial Documentation

• 3 years personal and business tax returns
• Personal financial statement
• 3 years of facility operating statements — P&L, balance sheet (acquisition loans)
• Current census report and payor mix (acquisition loans)
• Business plan and financial projections (startups and construction)
• State license copy or application documentation
• Entity documents (operating agreement, articles of organization)
• Construction cost breakdown and contractor information (construction loans)

Personal Guarantee

All owners with 20% or more ownership interest are required to provide an unconditional personal guarantee. This is a program requirement, not a lender option, and covers the full loan balance — not just the value of the real estate.

Financing Scenarios — Real Deal Structures

Can I Buy an Assisted Living Facility With No Money Down?

Yes — under specific circumstances, SBA financing for an assisted living facility can require zero cash from the borrower at closing. This is not a promotional claim; it reflects how the SBA 7a program is structured for experienced operators. There are three routes to no-money-down or near-zero-down financing:

Can SBA Loans Finance Multi-Facility Assisted Living Acquisitions?

Yes — and this is one of the most underutilized advantages of the SBA 7a program for senior care operators. There is no rule limiting an operator to a single SBA loan or a single facility. An experienced operator with available SBA eligibility can use the program repeatedly to acquire or construct additional facilities, provided each transaction meets standard eligibility requirements and the borrower has sufficient capacity to service the combined debt.

How Multi-Facility Financing Works

Each SBA 7a loan is evaluated independently. A borrower who used the 7a to acquire a first facility five years ago — and has paid it down or paid it off — has full SBA eligibility restored for a second transaction. A borrower with an active 7a loan on one facility can still qualify for a second 7a on another facility, provided the combined debt service is supportable by the combined cash flows of both operations.

For operators acquiring multiple facilities simultaneously or in rapid succession, lenders evaluate the aggregate debt service coverage across the entire portfolio. Strong performers on existing facilities carry meaningful weight — a stabilized, profitable first facility is one of the most powerful underwriting assets a borrower can bring to a second or third acquisition.

Portfolio Acquisitions

Acquiring multiple assisted living facilities in a single transaction — a portfolio sale by a retiring operator, a regional memory care group, or a small chain of board and care homes — is a transaction type SBA lenders will consider. These deals are structured case by case. Key factors include the aggregate loan size, the number of facilities, the geographic concentration, and whether the portfolio has a unified management structure in place. Portfolio transactions above $5M will typically require a 504 structure or a 7a with an unguaranteed companion loan behind it.

Memory Care Portfolio Acquisitions

Memory care facilities — which typically command higher per-bed values and generate stronger revenue per resident than standard ALFs — are among the most attractive portfolio acquisition targets for experienced operators. SBA financing is available for memory care portfolios under the same program rules as individual facility acquisitions. For larger memory care portfolio transactions, the 504 structure is often the better fit: the fixed rate on the SBA second mortgage portion provides rate certainty across what is typically a long-term hold, and the 504's capacity for $20M+ real estate transactions accommodates the larger per-facility values common in memory care.

How Large Can Assisted Living Transactions Get With SBA Financing?

SBA financing for assisted living facilities scales further than most borrowers — and many lenders — realize. The ceiling depends on which program is used and whether a companion loan structure is involved.

Transaction Type	Typical Size	Program	Structure
Residential care home or RCFE	$500K–$5M	SBA 7a or 504	Single loan, business + RE
Mid-size ALF (20–40 beds)	$1M–$7M	SBA 7a or 504	Single loan, business + RE
Larger ALF or memory care	$1M–$9M	SBA 7a or 504	7a + unguaranteed second
Large memory care or ALF, RE only	$10M–$20M	SBA 504	Conventional first + 504 second
Large RE + business value component	Up to ~$25M	SBA 504 + 7a	504 for RE, companion 7a for business/WC

The $20M–$25M Stack

The largest assisted living transactions accessible through SBA financing combine a 504 real estate structure with a companion SBA 7a loan. Here is how the math works at the upper end:

If the conventional first mortgage stretches to 60% LTV — which well-capitalized lenders will consider on strong transactions — the 504 real estate component alone reaches $25M, and the total transaction with a companion 7a can approach or exceed $30M. These are not theoretical numbers; they reflect the actual program limits applied to transactions where the real estate value and borrower strength support them.

Assisted Living SBA Financing — Frequently Asked Questions