SBA rules · SOP 50 10 8.1

Can an SBA loan finance a nursing home or assisted living facility?

Yes, an SBA 7(a) or 504 loan can finance a nursing home or assisted living facility, provided it is properly licensed, provides healthcare or medical services, and complies with Special Purpose Property requirements.

Quoted from SBA SOP 50 10 8.1Every quote checked word for word

In detail

Licensing and healthcare services: The business is eligible only if it is licensed as a nursing home, assisted living facility, or state-licensed equivalent, and provides healthcare and/or medical services such as wellness checks, assistance with medication, blood sugar monitoring, or onsite medical staff. Residential facilities that lack licensing or do not provide medical services are ineligible.
504 Borrower contribution: Under the 504 program, nursing homes and assisted living facilities are designated as Limited or Special Purpose Properties, requiring a minimum Borrower contribution of 15% of project costs, or 20% if the business is also a new business.
504 appraisal standard: When 504 loan collateral is a Special Purpose Property, the real estate appraiser must be experienced in that particular industry.
7(a) change of ownership terms: For 7(a) change of ownership transactions involving an owner-occupied Special Purpose Property, the loan maturity can be up to 25 years if 85% or more of total project costs are for real estate, a Quality of Earnings report is not required, and the appraiser must have completed at least four going concern appraisals of equivalent special use properties within the past 36 months.

The source

What the SOP says

“Businesses that are licensed as nursing homes, assisted living facilities, or state-licensed equivalents, and provide healthcare and/or medical services are eligible.

SOP 50 10 8.1, Chapter 1: Primary Applicant Eligibility Requirements > Note (lines 423-431)✓ Verified

“Residential facilities that are not licensed as nursing homes or assisted living facilities and do not provide healthcare and/or medical services are not eligible.

SOP 50 10 8.1, Chapter 1: Primary Applicant Eligibility Requirements > Note (lines 423-431)✓ Verified

“Nursing homes, including assisted living facilities;

SOP 50 10 8.1, Chapter 1: Eligibility through Submission of Application > Businesses with a Limited or Special Purpose Property: (lines 3447-3479)✓ Verified

“When the collateral is a Special Purpose Property, the appraiser must be experienced in the particular industry.

SOP 50 10 8.1, Chapter 1: Eligibility through Submission of Application > The appraiser must be: (lines 3616-3624)✓ Verified

“For transactions involving the acquisition of an owner-occupied Special Purpose Property which includes the business operating from that property, the Lender may also structure the loan with a maturity of up to 25 years if 85% or more of the use of the total project costs are for real estate.

SOP 50 10 8.1, Appendix 15: 7(a) Changes of Ownership > Special Purpose Properties Exemption (lines 5132-5135)✓ Verified

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