SBA 504 Financing for Assisted Living Facilities


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Assisted Living Facilities (ALFs) have become the preferred housing model for the elderly.  These facilities can offer the senior population access to luxurious amenities, medical support, and social activities that are often unavailable to those who live at home.

A recent study found that America’s older population is amid unprecedented growth. With the aging of the large baby-boom generation, the 50-and over population is projected to increase about 20 percent by 2030.

This rapid growth in the senior population has caused a significant rise in the need for Assisted Living Facilities. However, many ALF owners struggle to secure financing that will help expand and improve their services.

There is a simple solution – the SBA 504 loan program.

Why SBA 504 Loans are the Perfect Fit for ALFs

Owners of ALFs have turned to the Small Business Administration’s (SBA) 504 program to grow their businesses because compared to a conventional loan, the SBA 504 terms are significantly more attractive.

The SBA 504 program is specifically designed for small-to-medium sized businesses to purchase, renovate, construct or refinance commercial real estate with a low down payment and a below-market, 25-year fixed, interest rate.  This low down payment allows business owners the opportunity to preserve cash and stabilize their occupancy costs for the long term.

Through an SBA 504 loan, RCFE owners can acquire property but still retain the valuable working capital needed to improve their facilities and maximize tenant satisfaction.

In addition to commercial real estate, the senior care industry can utilize 504 loan proceeds to purchase high-quality equipment with a service life of 10 years or more. Examples of qualified equipment may include bed lifts, elevators, and even wheelchairs.

Case Study: Dean & Grey Care Services Leveraged an SBA 504 to Buy Facility

Karl Ramos and Anna Espinoza, co-owners of Dean & Grey Care Services, secured $1.6 million in SBA 504 commercial real estate financing.  The funds were used to purchase a 12-resident assisted living facility in Carmichael, CA.  With just 15% down, the owners acquired this property, allowing them to establish personalized, high-quality, long-term care for their residents.

The owners of Dean & Grey connected with TMC Financing’s vice president of business development, Arlene Villarin, who helped facilitate the purchase.

Special-purpose projects, like assisted-living facilities, often require very large down payments, sometimes as high as 40%,” Villarin explains. “For Dean & Grey, the 504 loan was the best financing option because the down payment requirement was only 15%. For many small business owners this is the difference that makes the dream a reality.”

By purchasing property through the SBA 504 loan program, Ramos and Espinoza not only stabilized their occupancy costs for the long term, but also eliminated the potential for unexpected and costly rent increases. Now, these senior care professionals can focus on what they do best – providing exceptional care for their residents.

Is My Assisted Living Facility Eligible for an SBA 504 Loan?

Most small businesses and residential care facilities are eligible for an SBA 504 Loan. You must be a for-profit business operating in the U.S. and occupy at least 51% of your purchased building or 60% for new construction.

About TMC Financing

You can find out more about the 504 loan program from one of TMC Financing’s 504 loan experts. TMC is the #1 SBA 504 lender nationwide and has funded projects worth more than $10 billion across Arizona, California, Nevada and Oregon. We have worked with professionals and business owners for over 40 years. TMC can help you find the financing that is best for your senior care facility and are happy to provide guidance through the whole loan process.