SBA Loans for Assisted Living Facilities & Senior Care Businesses
Acquisitions, ground-up construction, partner buyouts, startups, and refinancing for ALFs, memory care, board and care homes, nursing homes, and residential care facilities — with 10% down for most buyers and 0% for experienced operators expanding their portfolio.
| SBA 7a | 0–10% Down Payment | ~$9M Max (structured) | Fixed or Variable Rate | Up to 25-Year Term |
| SBA 504 | 10% Down Payment | $20M+ Project Capacity | Fixed Rate (SBA portion) | 25-30 Year Term |
Last Updated: May 2026
Green Commercial Capital has arranged SBA financing for assisted living facilities, memory care businesses, residential care homes, and senior care operators nationwide for more than 17 years. We work directly with borrowers throughout the financing process and maintain relationships with SBA lenders that specialize in senior care acquisitions, owner-occupied healthcare real estate, and construction financing. Transactions include facility acquisitions, partner buyouts, startup projects, ground-up construction, and commercial renovation loans for senior care businesses across the United States. Call 1-800-414-5285 or contact us here.
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.
Quick Answer: SBA Loans for Assisted Living at a Glance
The SBA 7a is the go-to loan for buying or starting an assisted living business because it finances both the business and the real estate. The SBA 504 is best for larger real estate transactions and long-term holds where a fixed rate on the SBA portion matters.
- SBA 7a: Up to ~$9M | 10% down for acquisitions | Single-close construction | 25-year term and amortization | Finances business + real estate together
- SBA 504: $1M–$20M+ | 10%-20% down | Lower fixed rate on SBA second mortgage portion | Best for larger real estate transactions
- 0% down: Available for experienced operators expanding their portfolio to a second location
- 5% down: Possible when seller holds a second mortgage of at least 5% on full standby for the life of the SBA loan
- Startups: Eligible — with the right borrower credentials and a credible business plan
- First-time assisted living buyers can qualify for 90% financing — 10% down — under both the SBA 7a and 504 programs.
- Experienced operators expanding to a second location can access 100% financing with no down payment required.
- The SBA 7a finances both the business (goodwill, licenses, equipment) and the real estate in a single loan — critical for care home acquisitions where value is split between the two.
- SBA loans have no financial covenants after closing — no ongoing DSCR tests, no minimum liquidity requirements, no distribution restrictions.
- Startups and new-to-senior-care borrowers are eligible — prior senior care experience is not required for all transaction types.
- When a seller holds a second mortgage of at least 5% on full standby for the life of the loan, the buyer's cash requirement drops to 5%.
- The SBA 7a single-close construction loan can finance land, construction, soft costs, contingency, and 12–24 months of ramp-up working capital.
- Residential care homes, RCFEs, board and care homes, and adult family homes are all eligible — facility size does not determine eligibility.
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.
Licensing is the key requirement. The facility must hold — or the borrower must obtain before funding — the appropriate state license for the care type being provided. The SBA does not evaluate the quality of care, staffing ratios, or facility-specific regulatory compliance. That falls to state licensing agencies. What matters for SBA eligibility is that the business is a licensed, for-profit care operation.
Which SBA Financing Option Is Right for My Situation?
| Borrower Situation | Best Fit | Why |
|---|---|---|
| Acquiring an existing licensed ALF with real estate | SBA 7a or 504 | Finances business + real estate together; 10% down |
| Acquiring an existing ALF — business only, leased space | SBA 7a | 7a can finance business-only acquisitions without real estate |
| Experienced operator, second facility | 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 5% note on full standby | SBA 7a or 504 | Buyer's cash requirement drops to 5% of purchase price |
| 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 a second location
- 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
Standard SBA Assisted Living Acquisition
First-time buyers of an existing licensed assisted living facility can typically qualify for 90% financing — 10% down — under both the SBA 7a and 504 programs. For startups or facilities with limited operating history, lenders may require 15%–20% depending on the strength of the borrower and the business plan.
Experienced Operators Expanding
Senior care operators who already own and operate a profitable facility and are acquiring or constructing an additional location may qualify for 100% financing — no down payment required. Track record of the existing facility, financial strength, and lender confidence in management capacity are the determining factors. See: 100% Financing for Commercial Real Estate.
Seller Financing Structures (Updated June 2025)
When a seller holds a second mortgage of at least 5% of the purchase price on full standby for the life of the SBA loan, the buyer's required down payment drops to 5%. The seller receives no principal or interest payments for the entire loan term. More detail on full standby seller notes here.
Flexible Sources Accepted
Both programs allow borrowers — or their spouses — to borrow the down payment from a separate source, provided payments on the borrowed funds can be covered from other income (not from the facility being financed). Other acceptable sources include gifts, retirement account rollovers, investor equity, and seller financing on full standby. See: Small Business Loan Down Payment.
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 10% to 20%. For new construction or facilities with limited operating history, 15% to 20% is more typical.
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 | 10%–20% down |
| Experienced operators | 0% down expansion possible | 10% down, 90% 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
ALF Acquisition — $2.5M Purchase Price (Business + Real Estate), 10% Down
| Real estate purchase price | $1,600,000 |
| Business / going-concern value (license, goodwill, census) | $700,000 |
| Equipment and furniture | $80,000 |
| Working capital | $50,000 |
| SBA guaranty fee (financed in) | $56,250 |
| Third-party closing costs (appraisal, environmental, title, legal) | $38,750 |
| Total project costs | $2,525,000 |
| Borrower equity injection (10%) | $252,500 |
Note: SBA 7a loan finances business + real estate + equipment + working capital in a single 25-year fully amortizing loan. No balloon. No separate business acquisition financing required.
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
Startup note: State licensing timelines vary significantly — from a few weeks in some states to 6–12 months in others. For construction or conversion projects, the SBA loan can close before licensing is complete, but the lender will want evidence of active licensure progress and a credible timeline. Some lenders require a state license commitment letter before funding. Generally a good idea to discuss the licensing timeline with both your state agency and us early in the process.
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 a second facility 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
RCFE and small care home note: Many residential care home transactions involve a personal residence being converted or already operating as a licensed care home. SBA lenders are experienced with these structures. The key issue is whether the real estate is commercial-use property or residential — lenders underwrite these differently, and some SBA lenders have more experience with residential-to-commercial care home transactions than others. Lender selection matters.
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
First-Time Buyer, Existing 20-Bed ALF, $1.85M Total (Business + RE)
Borrower is a registered nurse with 12 years of care management experience, no prior ownership. Facility is licensed, 85% occupied, 3 years of consistent P&L. SBA 7a finances business + real estate in one loan. Down payment: 10% ($185,000). 25-year amortization. No balloon.
Experienced Operator, Second Location, $2.1M Acquisition
Borrower owns and profitably operates a 16-bed board and care home for 5 years. Acquiring a second licensed facility. Down payment: $0. 100% financing through SBA 7a expansion rules. Both facilities' cash flows factor into DSCR analysis.
Ground-Up Memory Care Construction, $3.8M Total Project Cost
Healthcare administrator building a new licensed memory care facility. SBA 7a single-close finances land ($350K), construction ($2.7M), soft costs, contingency, construction interest, and 18 months of ramp-up working capital (~$750K combined). Down payment: 10% ($380K). DSCR evaluated at projected stabilized census; 24-month window begins at end of construction.
Seller Note Reduces Cash to Close, $1.4M Purchase
Seller agrees to hold a second mortgage equal to 5% of the $1.4M purchase price ($70,000) on full standby for the life of the SBA loan. Buyer's required down payment drops to 5% ($70,000). SBA 7a first mortgage: $1.26M. Buyer closes with $70K out of pocket instead of $140K.
Large Memory Care Acquisition, 504 Structure, $11.5M
Experienced multi-facility operator acquiring a stabilized 60-bed memory care facility. 504 structure: conventional first mortgage (50%, $6.3M), SBA-approved second mortgage (40%, $5M fixed rate), borrower equity (10%, $1.15M). Total financing: $10.35M at 90% LTV with fixed-rate certainty on the SBA tranche.
Residential Care Home Expansion, Business Only, $650K
Owner-operator of a 6-bed licensed RCFE purchasing a second 8-bed licensed home — business only, separate lease on the real estate. SBA 7a business acquisition loan: 10-year term. Down payment: 10% ($65K). Business value includes license, goodwill, census, equipment.
Assisted Living SBA Financing — Frequently Asked Questions
What is the minimum down payment for an SBA assisted living loan?
For most acquisitions, 10% is the standard minimum. Experienced operators expanding to a second facility can qualify for 100% financing — no down payment required. When a seller holds a second mortgage of at least 5% on full standby for the life of the loan, the buyer's cash requirement drops to 5%.
Can the SBA 7a finance both the business and the real estate together?
Yes — this is one of the primary advantages of the SBA 7a for assisted living acquisitions. The 7a can finance the going-concern business value (license, goodwill, census, equipment) and the real estate in a single loan at a single closing. The SBA 504, by contrast, only finances real estate and equipment — not business value.
Do I need prior assisted living experience to qualify?
No. SBA financing is available to borrowers without prior care home ownership. Lenders evaluate professional background (nursing, healthcare administration), business management experience, financial strength, and the specifics of the transaction. Acquiring a stabilized, cash-flowing facility with experienced staff in place is the strongest scenario for a first-time buyer without direct care home ownership experience.
Are small residential care homes and board and care homes eligible?
Yes. There is no minimum facility size requirement under either SBA program. A licensed 4-bed board and care home is eligible under the same rules as a 60-bed institutional ALF. The facility must be licensed by the appropriate state agency for the care type being provided.
Can I get SBA financing for a startup assisted living facility?
Yes, with the right borrower profile. Startups are eligible under the SBA 7a program. Lenders will evaluate professional background, state licensing status, a detailed business plan with census projections, and personal financial strength. A 10%–20% down payment is typical for startups depending on the lender and transaction type.
What changed with seller financing rules for assisted living loans?
Prior to June 1, 2025, a seller note of 10% on standby for 24 months allowed a buyer to close with no money down. Under current SBA rules, a seller note must be for at least 5% of the purchase price and must be on full standby for the entire life of the SBA loan. With that structure, the buyer's cash requirement is 5%.
Can I build a new assisted living facility with an SBA loan?
Yes. SBA 7a construction loans for assisted living and memory care facilities are available at 90% of total project cost. Total project cost includes land, construction, soft costs, contingency, construction interest reserves, and ramp-up working capital to cover debt service while census builds post-opening.
Do SBA assisted living loans have financial covenants?
No. SBA loans do not have ongoing financial covenants — no annual DSCR maintenance tests, no minimum liquidity requirements after closing, no distribution restrictions tied to performance thresholds. Once the loan closes on its original terms, those terms govern for the life of the loan. This is a meaningful structural advantage over conventional commercial lending for care facility operators.
What is the maximum SBA assisted living loan amount?
Through the SBA 7a program, structured deals can reach approximately $7–$9 million. The SBA 504 program accommodates transactions in the range of $20 million and above when the conventional first mortgage and SBA second mortgage are combined.
Can I use an SBA loan to buy out my partner in an assisted living facility?
Yes. Partner buyouts are an eligible use of proceeds under both programs. The transaction is underwritten similarly to a change of ownership acquisition and standard program requirements apply. See: SBA Partner Buyout.
For residential assisted living financing, is there a separate program?
The same SBA 7a and 504 programs apply to residential-scale care homes. For more detail specific to small licensed residential care facilities — RCFEs, board and care homes, adult family homes — see the dedicated guide: SBA Residential Assisted Living Business Loans.