May 18, 2024


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Seniors Housing and Assisted Living facilities Programs

6 min read
Assisted Living facilities

What loans are available in 2024 for the purchase, refinance, construction, or bridge of assisted living and senior living facilities?

  • SBA 504
  • SBA 7(a)
  • HUD 232
  • HUD/FHA 223(a)7 Refinance
  • HUD 202
  • USDA B&I
  • Fannie Mae
  • Freddie Mac
  • Cash-out refinancing
  • Multifamily Loans
  • Bridge Loans
  • Construction loans
  • Private Equity C-PACE Financing

Loans for acquiring or refinancing senior housing and assisted living facilities

Experience Commercial Lending USA’s unrivaled expertise in senior housing and assisted living facilities purchases, refinancing, recapitalization, and non-recourse loans. Our track record speaks for itself, and we are committed to providing specialized financial solutions to help you reach your company objectives.

Commercial Lending USA goes beyond traditional loan options. We provide access to non-recourse loans with government enhancement programs that reduce your capital costs while providing you with crucial non-recourse benefits. Several prestigious government agencies and sponsored enterprises, including the Small Business Association (SBA), the Federal Housing Administration (FHA), the Government National Mortgage Association (GNMA), the United States Department of Agriculture (USDA), and Fannie Mae, have insured or guaranteed our finance team’s extensive experience in originating mortgage loans.

Commercial Lending USA is your trusted partner if you’re looking to make a new acquisition, refinance your existing facilities, or explore recapitalization possibilities. We are committed to assisting you in navigating the complex environment of senior home and assisted living financing, allowing you to reach your financial goals and maximize the potential of your business.

Contact us today to see how our comprehensive financial solutions will help your seniors housing and assisted living endeavors reach new heights.

SBA 504 and SBA 7a for Senior Housing, Assisted Living Facilities, and Business Purchases

The SBA 7a and 504 lending programs are ideal for assisted living facilities acquisition or refinancing. Borrowers frequently find these loan packages appealing because they can borrow up to 85% of the purchase price. The borrower’s creditworthiness and the business’s financial soundness will determine the exact loan amount. These loans typically have a 3-year prepayment penalty and an amortization period of 25 years. Smaller projects primarily utilize these loans due to their frequent cap of $10 million, although regulatory changes may alter this figure. The SBA will now allow the inclusion of upfront fees in the total loan amount.

HUD FHA Section 232: Commercial Loans for the Acquisition of Multifamily, Senior Housing, and Assisted Living Properties.

HUD offers commercial loans for assisted living, skilled nursing, intermediate care, memory care, and other residential care facilities under Section 232. FHA-insured mortgages are available for the purchase or refinancing of residential care facilities that have a stable operating history. To expedite the refinancing process, the Federal Housing Administration 223(a)(7) LEAN program is offering loans to facilities that are currently insured by healthcare mortgages.

HUD’s mortgage insurance programs, specifically Section 232, provide mortgage insurance for the construction or major rehabilitation of senior home complexes, including assisted living, skilled nursing, and memory care. Typically, 232 loans remain fixed for up to 35 years and undergo full amortization.

  • Up to 80% leverage.
  • Up to 100% of transaction fees are for refinance.
  • Non-recourse, assumable
  • Up to a 35-year fixed-rate term.
  • The property categories include assisted living, memory care, skilled nursing, and intermediate care.

Assisted Living Construction Loan

  • Profit-motivated sponsors can get up to 80% leverage (85% for non-profits).
  • 1.45x the minimum debt service coverage ratio.
  • Fixed for up to 35 years, with full amortization.
  • Assumable, subject to HUD approval
  • Extremely competitive pricing

Supportive Housing for the Elderly Program (HUD Section 202)

HUD makes capital advances to finance the construction, rehabilitation, or acquisition, with or without rehabilitation, of structures that will serve as supportive housing for very low-income elderly people, including the frail elderly, and provides rent subsidies to help make the projects affordable.

USDA B&I for Senior Housing and Assisted Living Facility Financing.

The Department of Agriculture administers the USDA Business and Industry (B&I) program, another viable alternative for funding and building assisted living and senior care facilities in rural and semi-rural locations. The major qualification for these loans is geography. The facility must be in the USDA’s rural jurisdiction.

Fannie Mae’s Senior Housing and Assisted Living Facility Loan Program Overview

The Fannie Mae Seniors Housing Loan program provides mortgages for existing, stabilized, purpose-built senior living facilities that offer independent living, assisted living, Alzheimer’s/Dementia Care, or any combination thereof.

  • Prefer loan sizes larger than $2 million.
  • Offers a 75% LTV with fixed-rate maturities of up to 30 years.
  • Non-recourse, assumable.
  • Available to skilled operators.

Freddie Mac Seniors Housing, Assisted Living, and Multifamily Small Balance Loan Program

The Freddie Mac Multi-Family Loan Program bridges a gap in the small senior housing loan industry ($1MM–$7.5MM) for borrowers looking for competitively priced, repayment-free funding that does not require yield maintenance or a final balloon payment at the conclusion of the specified term.
The Small Loan Program maximizes your property’s cash flow by offering low interest rates, interest-only payment alternatives, no replacement reserves, and up to a 30-year amortization.

  • Loan amounts range from $1M to $7.5M.
  • Extremely competitive interest rates
  • The application locks in the interest rate.
  • Interest-only loans are available in both partial and full terms.
  • Yield maintenance or falling prepayment possibilities.
  • There are no replacement reserve requirements.
  • Non-recourse, assumable.
  • Available nationally.
  • Up to 80% LTV and 30-year amortization.
  • We offer fixed rate choices for 5, 7, and 10 years.
  • The system converts to ARM at the end of the fixed duration.
  • No underwriting floor rate maximizes proceeds.
  • Cash out at 80% in the top and standard markets.
  • Tax returns are not required.

Senior Housing and Assisted Living Facilities: New Construction or Significant Rehabilitation

HSI has vast experience planning and issuing construction loans and funding for repair and rehabilitation projects. Access to these gives us the ability to multi-track government agency funding choices, which means we can change financing structures to take advantage of lower interest rates and/or better terms and conditions.

Independent Living Construction Loan

It is important to know what is and isn’t acceptable when applying for FHA multifamily construction financing in order to build an age-restricted or senior community. HUD defines a senior community as any community that serves people aged 62 and up.

HUD 221(d)(4) financing for senior housing projects primarily prohibits assisted living. This implies the prohibition of communal dining areas. For example, this financing does not support traditional nursing homes. Instead, it solely sponsors “independent living facilities,” which allow seniors to live independently in flats without monitoring from the project. Either an independently hired company provides the food service, or it may not be available. For senior complexes, some developers prefer the Section 231 program over the 221(d)(4) loan. However, in recent years, FHA 221(d)(4) financing has surpassed this program in popularity.

C-PACE Financing for Senior Housing Properties and New Development

Property Assessed Clean Energy (PACE) is a financing technique that provides low-cost, long-term funding for energy efficiency, renewable energy, and water conservation initiatives. The property’s normal tax bill returns PACE financing as an assessment, offering benefits not found in other forms of finance.

Final Considerations

When considering a loan request for senior living, the lender will look for the following factors in addition to good personal credit:.

  • Positive trend. Nothing terrifies lenders more than declining sales and earnings trends in a company or industry. A lender, on the other hand, finds a pronounced positive tendency to be rather appealing. They may look back several years to evaluate how the business performed during previous economic cycles.
  • Business plan. Buyers must provide a basic business plan for the senior care firm they are acquiring. Lenders want to see a deep understanding of the business and sector. In most circumstances, a strategy that calls for slow growth and incremental change is the safest option.
  • Continuity. Commitments from existing managers, key people, suppliers, and customers to continue working with the new owner decrease a lender’s risk.
  • Seller training. Lenders prefer to see a well-thought-out management transition strategy. A training or transition period for the new owner could last anywhere from one to twelve months. Make sure to negotiate this subject up front and clearly state it in the purchase agreement.
  • Seller financing. When a seller offers to finance even 10–15% of the purchase (subordinated to the banknote), it demonstrates to the lender that the seller believes in the firm under the new buyer’s leadership and is committed to making the transition successful. Lenders frequently enforce this condition.

Loans are readily accessible for the acquisition or refinance of an independent or assisted living facility or business, the development of a new senior housing facility, or the expansion of an existing senior housing business. Allow us to guide you through the process and position you for a successful loan approval.

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